Integration in a Changing MENA Region: Prospects for Increasing Inter-regional

Investment

Nadereh ChamlouSenior Advisor, The World Bank

May 10, 2012AmCham Meeting

Tunis, Tunisia

Introduction

The purpose of this presentation is to highlight:• the changing global talent pool, • the growing number of offshoring jobs, and • the viability of MENA as an offshore destination.

3Source: UNESCO Yearbook – 2010 – annual number of university graduates

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Why the Netherlands as a Proxy for Europe?One of the leading economies in Europe, mirrors aggregate of Europe’s overall economyTied to and a player in the global economy – with leading companies in every sectorLarge and growing service sector Graying population with 20% of workforce foreign – needs to tap into global talent poolFinally, available infrastructure to carry out a detailed firm survey

Source: World Development Indicators

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Distribution of firms in the survey

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Nearly 80% of offshored activities involve up to 10 workers per location…this is good news, as it will not involve extensive large scale up-stream work that is typically necessary for manufacturing operations.

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High skilled offshoring jobs more likely to go to India. But, MENA is in like with overall industry trends.

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Manpower, regulation, infrastructure, culture and corruption are the top five barriers for MENA, though these barriers are equally present in other regions, some more and some less severe.

Interestingly, the culture factor is more pronounced for China and even for other advanced ecnomies.

Corruption seen as even a prevalent barrier in other regions as well.

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English skills slightly lower than other region, but not too far lower than comparator emerging markets

Source: TOEFL Test scores

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GMAT scores are a proxy for proficiency of college graduates across countries in subjects that are relevant for businesses and management – highly important for Offshoring

sectors – MENA could improve in order to be more competitive.

• In the book: “The Fierce Battle for Female Talent in Emerging Markets”, Patricial Hewlitt and Ripa Rashid report on the growing interest in women employees among multinational companies.

• MENA could benefit more from the global offshoring market by including more women in its labor force, and removing barriers to hiring them.

• The region has invested significantly in girls education and has a large untapped talent pool.

• Women workers in MENA possess both the hard skills (science, math, engineering) as well as the soft skills (interpersonal) necessary for offshoring industries.

MENA’s Untapped Potential of Female Workers

Girls perform better than boys in science – the gender gap is reversed -- contrary to other regions.

In most MENA countries, girls outperform boys in math – contrary to other regions.

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Share of female graduates in science

Source: UNESCO Yearbook

In MENA, women account for a higher share of university graduates in science than in other regions, even in advanced economies.

Women account for a quarter of the region’s engineers, a slightly higher share than in advanced economies.

Share of female graduates in engineering, manufacturing, and construction

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Share of women graduation in field of education

Source: UNESCO Yearbook

Women account for roughly a similar share of graduates in education – an important field for offshoring as it entails a great deal of training, coaching and mentoring of workers.

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Share of female graduates in social sciences, business, and law

Source: UNESCO Yearbook

Women in MENA account for over half of graduates in fields that involve increasingly the type of “back-office” jobs that are being offshored by companies to emerging markets.

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Firms rated the advantages of hiring women in MENA over hiring men higher than other regions, largely due to “soft skills”. They also rated “other” issues as a high disadvantage of hiring women over men. The disadvantages include legal and social

restrictions on women’s work, permission to work, hours of work, etc.

And finally, the important element of “soft” skills

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13 Bulgaria

17 Bulgaria

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40 Slovakia 40

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6 Egypt

4 Egypt

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9 Jordan

22 Jordan

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18 Estonia

11 Estonia

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32 Czech Rep

35 Czeck Repub

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37 Hungary

31 Hungary

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17 Tunisia

23 Tunisia

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19 Romania

25 Romania

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30 Morocco

37 Morocco

2007 2009 2011

Source: AT Kearny Survey of Executives (2007-2011)

Ranking of Selected Global Offshoring Destinations

•Post–2008 financial crisis, there is a rearrangement among the top choices for global offshoring•MENA was gaining steadily with some declines in ranking post-Arab Spring.•Now is the time for MENA to step forward.

Conclusion

• Firms, particularly SMEs, in advanced economies are looking for new offshore destinations

• MENA has the fundamentals as an attractive offshore haven

• Women constitute a large share of the talent pool in MENA and, with fewer barriers, could enhance MENA’s viability as a destination

Thank you