GLOBAL PRODUCTIVITY
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boost private investment and productivity. They can also provide firms easier access to critical inputs, such as improved electricity supply. They can support productivity through better allocation of resources (for example, more efficient taxation systems) and stronger entrepreneurship activities (for example, lower cost to start a business). In MNA, reforms that move an economy one unit higher in the Global Competitiveness Index have been estimated to have raised productivity potential significantly (Mitra et al. 2016). Many MNA economies have adopted broad-based business climate reforms recently, including improved electricity connection in Bahrain, enhanced electronic tax filing in Jordan, and easier property registration in Kuwait. Improve governance. Governance quality in MNA, especially in non-GCC economies, lags behind other EMDEs and has improved little over the past decade. Weak governance has discouraged private sector activity and investment (Nabli 2007). Reforms such as streamlining public service delivery and strengthening legal frameworks in areas like procurement laws can increase productivity growth by encouraging more efficient allocation of resources. They can also increase investment prospects through improved investor confidence. Reforms for SOEs in telecom industries can also enhance productivity via higher efficiency (Arezki et al. 2019b). Improve gender equality. Women account for only about one-fifth of the labor force in MNA. Bridging the gender gap in a number of areas, including workforce development and access to digital and financial services, is especially relevant for MNA. Closing these gaps can raise productivity growth through more vibrant entrepreneurship and private sector participation. Legislation to reduce economic discrimination against women in Tunisia is an example of a recent reform in this area.
South Asia In contrast to other regions, labor productivity growth in SAR slowed only mildly after the GFC. During 2013-18, SAR’s productivity growth remained the second fastest among the six EMDE regions, at 5.3 percent a year. Although this has helped reduce the region’s wide productivity gap with the advanced economy average, the level of productivity in SAR remains the lowest among EMDE regions, in part reflecting widespread informal economic activity and struggling manufacturing sectors. Low human capital, poor business environments, inefficient resource allocation, and limited exposure to foreign firms and foreign investment also weigh on productivity. Moreover, SAR economies are likely to face a broad-based decline in labor productivity growth because of the COVID-19 shock. Increasing openness, by enhancing FDI inflows and participation in global and regional value chains, could support technology and information transfer to the region and boost productivity growth. Promoting access to finance and improving infrastructure could lift firm-level productivity in the region.
Evolution of regional productivity Robust productivity growth. In contrast to other EMDE regions, productivity growth in SAR slowed only mildly after the GFC, to 5.3 percent a year during 2013-18, from
