@usaidmena #yemen gap analysis april 2011

8/3/2019 @USAIDMena #Yemen Gap Analysis April 2011

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Yemen Gap Analysis

Strategic Planning & Analysis Division

E&E Bureau

USAID

April 25, 2011

Highlights. Yemen is confronted with substantial economic, political, social, and securitydevelopment gaps compounded by depleting vital resources. Its current multi-faceted crisis hasbeen in train for a number of years.

(1)Yemens development gaps. Drawing on USAID/E&EsMonitoring Country Progressindices, Yemen trails behind all countries in a Middle East and North Africa (MENA) sample ofeleven countries in investing in people, and is trailed only by Syria in governing justly anddemocratically, and Iraq in economic performance. It is among the leastpeaceful and securecountries worldwide, and scores particularly poorly on the governments capacity to counterterrorism as well as in its ability to combat weapons of mass destruction.

Yemen has the lowest per capita income, the greatest gender disparities, the highest under-fivemortality rate, the lowest life expectancy, the most significant environmental health challenges,and the lowest education enrollments rates of the MENA countries. It has had the lowest fiveyear per capita economic growth average of the MENA region, and, alongside Iraq, has thelargest economic disparities. Yemen is among the poorest performers worldwide in thedevelopment of an independent media, in the rule of law, and in the control of corruption.

(2)Yemens economic (and resource) crisis. Economic stagnation has been the norm in Yemenseconomy for years. In only two years since 1999 has Yemens economy expanded on a percapita basis in excess of 1%. Yemens poor economic performance is attributed in no small partto its substantial dependency on two global primary commodity markets which are characterizedby excessively volatile prices: oil and food. Hydrocarbons account for 30 percent of GDP,nearly 75 percent of government revenues, and over 90 percent of foreign exchange earnings.Up to 30 percent of Yemens merchandise imports are food imports.

Yemen is on track to run out of oil, perhaps by 2020. Yemens steady decline in oil productionbegan in 2003. The extreme fluctuations in the price of oil in recent years have to some extentmasked the challenges and harmful impact of being dependent on such a critical depletingresource. Today the price of oil is higher in inflation-adjusted terms than it has ever been. Thehistorically high price of oil boosts Yemens economic and fiscal prospects in the immediateterm, though likely to the detriment of Yemens medium-term and long-term economicprospects.

Food imports in Yemen have increased substantially since 2002 in dollar terms. Much of thatincrease is likely attributed to substantially increasing food prices. Global food prices rosegradually from 2003 to 2006 and then, to a great extent mirroring oil price trends, increasedsubstantially in 2007 to early 2008, decreased substantially in the latter half of 2008, only toresume price increases in 2009 through 2011. As with oil prices, food prices are currently athistoric highs.

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Yemens economic crisis is partly a fiscal crisis brought on in no small by falling oil exports andgrowing food imports. Yemens fiscal crisis has been in the making for a number of years. Boththe current account balance and the fiscal balance have been deteriorating since the early 2000s.

Yemen is also on track towards depleting its supply of fresh water. This resource constraint mayultimately be more challenging than oil. There are alternatives to oil; there are no alternatives tofresh water. Internal renewable fresh water per capita in Yemen is among the lowest worldwide,and usage has been exceeding the rate of renewal. Yemen has the sixth highest rate of waterdepletion in the world, with over 50% of its territory affected by overuse.

(3)Yemens social (and food security) crisis. There is evidence that alongside a stagnating

economy, Yemens poverty rate has increased and with it, food insecurity. While the poverty

rate varies widely across the governorates, from over 65% in Amran to under 15% in Al-

Maharah, poverty increased across all the governorates from 2005 to 2010 except for one,

Shabwah.

A macro measure of food security is an economys total exports relative to food imports. In2002, it took 14% of Yemens export revenues to pay for food imports. By 2009, it took 33% ofexport revenues to pay for food imports. More recently, with higher food prices and fewer oilexports, food insecurity by this measure is likely greater still. The International Food PolicyResearch Institutes 2010 Global Hunger Index designates Yemens food security challenges asalarming, comparable to food security challenges found in much poorer Sub-Saharan Africancountries as well as in Haiti. The percentage of stunting in children under five years of age isestimated to be 56% in Yemen, second only in the world to Afghanistan, and the percentage ofunderweight children is 46%, the third highest rate after India and Bangladesh.

As with poverty rates, food insecurity varies widely within Yemen, across its governorates.Most governorates (12 out of 19 for which data were available) had at least 30% of its populationdeemed food insecure in 2009 by the World Food Programme (WFP). According to the WFP,increasing food prices in 2009 were perceived to be problematic for far more households than thesignificant challenges stemming from water scarcity, high fuel prices, or high healthexpenditures. Given the significant rise in food prices since then, current concerns about risingfood prices and the possible repercussions from those concerns are likely only to be heightenedfurther still in todays Yemen.

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Introduction. This analysis attempts to examine the available evidence of key developmenttrends and gaps in Yemen. This includes: (1) Yemens development profile and salient gapscompared primarily to the Middle East; (2) evidence of Yemens worsening economic and socialcrises; and (3) contributing factors behind the current crises in Yemen, including trends towardsthe depletion of key resources (oil and water), food insecurity, and the considerable economic

and social disparities within Yemen.

Yemen vs. the Middle East (Figures 1-7, Tables 1-5). We draw on the dataset and methodologyof the Europe & Eurasia BureausMonitoring Country Progress (MCP) system for this first partof the analysis. The core of the MCP system consists of five indices: (1) economic reforms; (2)governing justly and democratically; (3) economic growth and performance; (4) investing inpeople; and (5) peace and security. We use readily available public data and standardize themetrics to a 1 to 5 scale in which a 5 represents the most advanced standards worldwide.Primary sources of data for MCP Global include the World Bank, Freedom House, UNDP,UNICEF, UNODC, U.S. Department of State, U.S. Department of Commerce, and USAID. TheAppendix elaborates on the sources of data, the indicator definitions, and the MCP methodology.

Figure 1 provides an overview of Yemens development progress across four of the five MCPindices compared to progress on average of the eleven-country Middle East and North Africa(MENA) region. The MENA region includes Iraq, Syria, West Bank/Gaza, Yemen, Lebanon,Egypt, Morocco, Jordan, Algeria, Tunisia, and Turkey. Each circle on this chart represents acountry observation, and hence provides a view of the distribution of performance across theMiddle East. Yemens development progress lags well behind the MENA average on all fourdimensions: on economic reforms; governing justly & democratically; economic growth &performance; and in investing in people. Yemen lags the most in investing in people (i.e., inhealth, education, per capita income, and gender inequality).

Figures 2 and 3 (and Tables 1-4) reinforce the results ofFigure 1, and identify specific countryresults in the MENA region as well as in a handful of comparison countries outside the region.Yemen trails behind all other MENA countries in investing in people. Of the MENA countries,only Syria lags more than Yemen in governing justly and democratically, and only Iraq lagsmore in economic performance. Figure 4 and Table 5 show the results of the MCP peace andsecurity index with a limited global dataset. The results underscore, not surprisingly, that Yemenis among the least peaceful and secure countries worldwide, though, at least according to theselargely 2009-2010 data, Yemen is not the least peaceful and secure in the world; Pakistan securesthat distinction.

Figures 5-7show the components of the five MCP indices in a series of spider charts. Theblue area denotes Yemens progress on that dimension; the greater the blue area, the greater theprogress. The red lines represent the progress of other countries so as to compare. The overallpicture is one of a country with considerable challenges across the development spectrum, acountry which is among the poorest performers worldwide on a host of dimensions (i.e., withscores of a 1 or close to a 1).

In economic reforms, Yemen lags the most in economic governance and effectiveness, and infiscal reform. It is currently in fiscal crisis and has incurred significant fiscal deficits in recent

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years. In governing justly, Yemen is among the poorest performers worldwide in thedevelopment of an independent media, in the rule of law, and in the control of corruption.Results from a World Bank enterprise survey shown in Figure 8 underscore the challengesstemming from corruption and inadequate rule of law. In investing in people, Yemen has thelowest per capita income, the greatest gender disparities, the highest under-five mortality rate,

the lowest life expectancy, the most significant environmental health challenges, and the lowesteducation enrollments rates (primary, secondary, and tertiary rates combined) of the MENAcountries (Table 4).

Macroeconomic performance gaps are also significant. Yemen has had the lowest five year percapita economic growth average of the MENA region. Alongside Iraq, it has the highesteconomic disparities between ethnic and religious groups (i.e., uneven development). It hasamong the least developed financial sector in the region (i.e., extremely low domestic credit as a% of GDP), and the least developed export sector (only about 2% of its exports are manufacturedgoods). Yemen scores higher than or close to the MENA average on three macroeconomicperformance indicators: environmental sustainability; energy security; and macroeconomic

stability. However, as will be elaborated below, progress in all three aspects is likely to be short-lived at best. On peace and security, Yemen scores particularly poorly on the governmentscapacity to counter terrorism as well as in its ability to combat weapons of mass destruction.

Yemens economic (and resource) crisis (Figures 9-21). Over the medium term, Yemenseconomy has been keeping pace with global economic growth (Figure 8). From 1999 throughforecasts to 2012, economic growth in Yemen is estimated to be 3.6% compared to 3.8% worldeconomic growth. However, this comparison masks that Yemens economy actually acceleratedits growth during the global economic crisis (from 2008 to 2010), and that during the severalyears prior to the global economic crisis (from 2004-2007 in particular) as well following thecrisis (forecasted trends in 2011-2012), Yemens economy has performed or is performing wellbelow global standards.

Economic crisis or at least economic stagnation in Yemen becomes apparent when Yemensrapid population growth is taken into account. Population growth in Yemen is among the highestworldwide. From 1990-2009, average annual population growth in Yemen was 3.4%. Thiscompares to 0.7% growth among the high income developed countries of the world, 2.0% in theMiddle East and North Africa, and 2.3% in all the low-income developing countries of the world.Current estimates of population growth in Yemen range from 2.9% to 3.2%. Hence per capitaeconomic growth in Yemen is much lower than economic growth, and compares much lessfavorably to global standards than GDP expansion alone (Figure 10). More specifically, in onlytwo years since 1999 has Yemens economy expanded on a per capita basis in excess of 1% (in2000, 2% and 2010, 3%). On a per capita annual average basis, Yemens economy is likely toexpand by only 0.4% from 1999-2012. It is currently contracting. Figure 11 provides anotherbasis of comparison: Yemens per capita economic growth of 0.4% during 1999-2012 comparedto 5.4% in Tunisia, Morocco, and Lebanon on average.

Yemens poor economic performance is attributed in no small part to its dependency on andvulnerability towards two global primary commodity markets which are characterized byexcessively volatile prices: oil and food (Figure 12). Hydrocarbons account for 30 percent of

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GDP, nearly 75 percent of government revenues, and over 90 percent of foreign exchangeearnings. Twenty-five to thirty percent of Yemens merchandise imports are food imports.

Yemen is on track to run out ofoil(Figure 13). Drawing on production estimates from theEconomist Intelligence Unit, extrapolating them forward, and assuming no additional oil is

discovered in Yemen (obviously important and very plausibly inaccurate), we estimate that oilproduction could cease by 2020. Yemens steady decline in oil production began in 2003.Ironically, another contributing factor is the impact of the current crisis in Yemen whichhas resulted in a reduction in oil production, perhaps significantly. If this trend is sustained, oildepletion in Yemen will be slowed though obviously at substantial short-term costs.

While the volume of oil production in Yemen has been declining since 2003, Yemens oilexports (in $) continued to increase significantly from 2003 to 2008 (Figures 14 and 15). Theseexports dropped substantially in 2009 and, at least according to forecasts for 2011 and 2012 fromthe Economist Intelligence Units March 2011 Yemen Country Report, are likely to remainrelatively low in the near future. The price of oil accounts for much of these trends and the

extreme fluctuations (Figure 16). From 2003-2008, the price of oil skyrocketed to historiclevels, then plummeted in 2009 only to increase rapidly again in 2010 and to date in 2011.Today the price of oil is higher in inflation-adjusted terms than it has ever been. The historicallyhigh price of oil boosts Yemens economic and fiscal prospects in the immediate term, thoughlikely to the detriment of Yemens medium-term and long-term economic prospects.

Food imports in Yemen have increased substantially since 2002 in dollar terms (Figure 17).Much of that increase is likely attributed to substantially increasing food prices (Figure 18).According to the Food and Agricultural Organizations food price index, global food prices rosegradually from 2003 to 2006 and then, to a great extent mirroring oil price trends, increasedsubstantially in 2007 to early 2008, decreased substantially in the latter half of 2008, only toresume price increases in 2009 through 2011. As with oil prices, food prices by this measure arecurrently at historic highs. As a percentage of total merchandise imports, food imports in Yemenare currently close to 30%, up from 25% in recent years past.

Yemens economic crisis is partly a fiscal crisis brought on in no small by falling oil exports andgrowing food imports. Figures 19 and 20 suggest that Yemens fiscal crisis has been in themaking for a number of years. Both the current account balance and the fiscal balance have beendeteriorating since the early 2000s; the surpluses of the late 1990s and early 2000s have givenway to growing and consecutive deficits which are ultimately not sustainable. With the currentcrisis, government spending has apparently increased substantially, and tax revenues havedecreased; i.e., the fiscal deficit in 2011 may be notably greater than projected in Figure 20.

Yemen is also on track towards depleting its supply offresh water. This resource constraint mayultimately be more challenging than oil. There are alternatives or energy substitutes to oil; thereare no such alternatives to fresh water. Internal renewable fresh water per capita in Yemen isamong the lowest worldwide (Figure 21); according to the World Bank, in only four countries in2007 (latest year of available data) was it lower than in Yemen: Egypt; Kuwait; Qatar; and theUnited Arab Emirates.

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Moreover, fresh water usage in Yemen has been exceeding the rate at which water is beingrenewed. Yale and Columbia University scholars have developed theEnvironmentalPerformance Index which includes two indicators which pertain to water depletion. One isreferred to as the water scarcity index; this is essentially the ratio of fresh water usage to therenewal of fresh water for a given country as a whole. The second indicator is referred to as the

water stress index; this is the proportion of a given countrys territory where water is beingoverused (where usage exceeds renewal). A country can have a certain proportion of its territorywhich is overusing water and yet not be depleting its fresh water overall.

According to the data from theEnvironmental Performance Index (which draws from the FAOsAquastat dataset), there are twenty five countries (out of the global sample of 156 countries)where fresh water depletion is occurring. We show those countries in two charts. Figure 22highlights the top six water depleting countries of the world (employing the water scarcity index)and couples those data with the proportion of the countrys territory which is affected by overuse(i.e., the water stress index). By these calculations, the United Arab Emirates has the highest rateof water depletion in the world. Yemen has the sixth highest rate of water depletion, with over

50% of its territory affected by overuse. Figure 23 repeats the results of Yemen and Qatar andbrings in the remaining countries which are incurring water depletion. All except two of thetwenty-five countries are in the Middle East and North Africa or in Central Asia. The twoexceptions are Bulgaria and Belgium. Figure 24 shows the trends of renewable water resourcesper capita over time in six of these water depleting countries. The trends are largely consistentwith the results in Figures 22 and 23, namely, renewable water resources on a per capita basishave been declining in these countries since at least 1992. The decline in renewable waterresources per capita in Yemen is among the more pronounced of the six countries.

A number of reports and/or articles have contended that Sanaa, Yemens capital, may run out ofwater ranging in time from 2017 to 2025. Two pieces of evidence to support this are found inFigure 25. One, groundwater levels in the Sanaa basin have presumably dropped from less than30 meters below the surface in the early 1970s to around 270 meters by 2010. The water supplyhas become increasingly inaccessible. Two, the demand for that water has grown substantially;population growth in Sanaa is reportedly 7 percent per year, by at least one account, the fastestgrowing population of any capital city in the world.

Yemens social (and food security) crisis. As noted above (and shown in Table 4), Yemenssocial indicators are dismal. On most dimensions in health and education, poverty and income,Yemen is the least developed of the MENA region. Gender disparities are a key part of that.Females in Yemen are much less likely to participate in the education system or in the workforce than are males (Figures 26and 27). For Yemeni women, the contraceptive prevalence rateis 27.7% compared to the regional average of 42.8%, and the fertility rate for adolescent girls is80 (number of births per 1000 girls aged 15-19) compared to the regional average of 35.Approximately 36% of births are accompanied by a skilled birth attendant (regional average of59%).

Still, some of Yemens social indicators have shown progress in recent years. From 1999-2009,life expectancy in Yemen increased by 4 years, from 59 to 63. During the same time period, lifeexpectancy in Tunisia increased by 1 year, from 73 to 74; Egypt by 2 years, from 68 to 70. From

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2000 to 2009, under-five mortality rate decreased in Yemen by 34 deaths per 1,000 live births,from 100 to 66. During the same time period, under-five mortality rate decreased by 6 deaths inTunisia, from 27 to 21; in Egypt, by 26 deaths, from 47 to 21. From the early 2000s to 2008-2009, adult literacy rate increased by 7 percentage points in Yemen, from 55% to 62%; inTunisia by 4 percentage points, from 74% to 78%.

However, there is also evidence that alongside a stagnating economy, Yemens poverty rate hasincreased and with it, food insecurity. Figure 28 shows estimates of Yemens poverty ratesacross the 21 governorates in two time periods. By this measure, 43% of Yemens populationwas in poverty in 2010, an increase from 35% in 2005. While the poverty rate varies widelyacross the governorates, from over 65% in Amran to under 15% in Al-Maharah, povertyincreased across all the governorates during this time period except for one, Shabwah.

A macro measure of food security is an economys total exports relative to food imports. Thelower is this ratio, the greater is the proportion of export revenues needed to pay for foodimports. For Yemen in recent years, the ratio of exports to food imports peaked in 2002 and has

substantially fallen since then through 2009, latest year of available data (Figure 29). In 2002, ittook 14% of Yemens export revenues to pay for food imports. By 2009, it took 33% of exportrevenues to pay for food imports. More recently, with higher food prices and fewer oil exports,food insecurity by this measure is likely greater still.

Figure 30 provides another measure of food security which allows for cross-countrycomparisons. This is the International Food Policy Research Institutes 2010 Global HungerIndex (GHI). The GHI incorporates three hunger-related indicators: the proportion ofundernourished in the population; the prevalence of underweight in children, and the mortalityrate of children. The 2010 GHI reflects data from 2003-2008 and is calculated for 122 countries.Results in the scores range from


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Central African Republic ($750), Madagascar ($990), Niger ($680), Comoros ($1,180), SierraLeone ($790), Zambia ($1,280), and Liberia ($290). (Oil-rich Angola has a per capita income of$5,190 and is a salient exception to this trend). Overall, this suggests that Yemens foodinsecurity challenges are greater than one would expect given its level of per capita income.

The percentage of stunting (low height for age) in children under five years of age is estimated tobe at 56%, second only in the world to Afghanistan, and the percentage of underweight childrenis 46%, the third highest rate after India and Bangladesh. Over 43% of Yemens population isunder age 14; the median age of Yemens population is 18 years.

As with poverty rates, food insecurity varies widely within Yemen, across its governorates. TheWorld Food Programme estimated that the proportion of the population which was food insecurein 2009 varied from almost 55% in Raymah to less than 10% in Sanaa City (Figure 31). Sixty-one percent of Yemens malnourished children and 57% of Yemens malnourished women arefound in five of the governorates: Raymah, Hajjah, Ibb, Ad Dali, and Amran. Still, mostgovernorates (12 out of 19 for which data were available) had at least 30% of its population

deemed food insecure, and country-wide, 32% of the population was considered food-insecure in2009 by this measure.

Not surprisingly, the governorates with higher poverty rates tend to have greater food insecurity(Figure 32). Two governorates stand out as outliers. While the poverty rates in Raymah andHadramaut were essentially the same in 2010, close to 45%, Raymah had the highest proportionof its population suffering from food insecurity in 2009 of all the governorates (53%), whileHadramut had the lowest proportion of food insecurity (at 10%), save Sanaa City (at 8%).

Finally, it is instructive to add household perceptions of the most significant difficulties faced byYemen households into the analysis (Figure 33). In 2009, regardless of whether householdswere considered food insecure or food secure, the increase in food prices was perceived to beproblematic for far more households than the significant challenges stemming from waterscarcity, high fuel prices, or high health expenditures. Given the significant rise in food prices in2010 (as shown in Figure 18), a trend which has so far continued into 2011, and given the highand likely rising poverty rate of the population, the concerns about rising food prices and thepossible repercussions from those concerns are likely only to be heightened further still intodays Yemen as compared to 2009.

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Yemen MCP Gap Analysis Update

USAID

E&E BureauStrategic Planning and Analysis Division

April 2011


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Yemens Development Profile

2009-2010

Economic Reforms Governing Justly

and Democratically

Economic Growth

and PerformanceInvesting in People

Yemen

MENA Avg.

1

1.5

2

2.5

3

3.5

4

4.5

5

ings are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data

rces. Middle East and North Africa (MENA): Iraq; Syria; West Bank/G.; Yemen; Lebanon; Egypt; Morocco; Jordan; Algeria; Tunisia; Turkey.

igure 1


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EconomicReforms

Governing Justly and Democratically

gs are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data sources.

Economic Reforms and Governing Justly

& Democratically in 2009-2010

Turkey

Tunisia

AlgeriaJordan

MoroccoEgypt

Lebanon

Yemen

West Bank/Gaza

Syria

Iraq

Chile

Colombia

Ghana

Botswana

Indonesia

India

Latvia

Russia

1

1.5

2

2.5

3

3.5

4

4.5

5

1 1.5 2 2.5 3 3.5 4 4.5 5

igure 2


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Jordan

LebanonTunisiaMorocco

Egypt

Algeria

Turkey

Syria

Yemen

Iraq

Chile

Colombia

Ghana

Botswana

Indonesia

India

Latvia

Russia

1

1.5

2

2.5

3

3.5

4

4.5

5

1 1.5 2 2.5 3 3.5 4 4.5 5

EconomicPerformance

Investing in People

Economic Performance and Investing in People,

2008-2010

gs are based on a 1 to 5 scale, with 5 representing the most advanced worldwide. See appendix for elaboration of indicator definitions and data sources.

igure 3


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1

1.5

2

2.5

3

3.5

4

4.5

5

igure 4

Peace and SecurityRegional and Global Comparison

gs are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data sources.


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Economic Reforms Governing Justly and Democratically

Yemens Development GapsVersus Middle East/North Africa Average

ings are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data

rces. Middle East and North Africa (MENA): Iraq; Syria; West Bank/G.; Yemen; Lebanon; Egypt; Morocco; Jordan; Algeria; Tunisia; Turkey.

Business

Environment,2.7

Regulatory

Quality, 2.28

GovernmentEffectiveness,

1.38Budget

Balance, 1

Trade

ralization,

4.24

1

2

3

4

5

MENA Average

Political

Rights, 1.67

Civil L

2

Media

Freedom, 1.27Rule of Law,

1.45

Corruption,

1.41

1

2

3

4

5

ENA

igure 5


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Investing in People Economic Performance

ings are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data sources. Middle East and

rth Africa (MENA): Iraq; Syria; West Bank/G.; Yemen; Lebanon; Egypt; Morocco; Jordan; Algeria; Tunisia; Turkey

GDP per capita

Growth

Macrostability

3.45

FDI , 1.7

Exports, 1

Energy Security ,

3.16

Uneven

Development,

1.25

Environmental

Sustainibility,

3.55

Domestic Credit,

1

1

2

3

4

5

Yemens Development GapsVersus Middle East/North Africa Average

MENA

Under-5

Mortality, 3.5

Life Expectancy,

3

Health Exp.,

1.47

Environmental

Health, 2.15

Combined

Enrollments,

1.89

Literacy Rate,

2.54

Educational

Exp., 3.1

Per capita

ome, PPP, 1

Gender, 1

1

2

3

4

5

ENA

igure 6


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Counter-

terrorism ,1.3

Combating

Weapons of

Mass

Destruction ,

1.7

StabilizationOperations ,

2.3Counter-

narcotics ,

3.0

Trans-

national

rime , 2.5

Conflict

Mitigation ,

2.3

1

2

3

4

5

Peace & Security in YemenVersus Morocco and Iraq

igure 7

Morocco

Counter-terrorism , 1.3

Combating

Weapons of

Mass

Destruction ,

1.7

StabilizationOperations ,

2.3

Counter-

narcotics , 3.0

Trans-nationalCrime , 2.5

Conflict

Mitigation ,

2.3

1

2

3

4

5

Iraq

ings are based on a 1 to 5 scale, with 5 the most advanced worldwide. See appendix for elaboration of indicator definitions and data sources.


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Yemen Business Constraints

0

10

20

30

40

50

60

70

80

90

% of Firms Expected to

Pay Informal Payment to

Public Officials (to Get

Things Done)

% of Firms expressing

that a Typical Firm

Reports less than 100%

of Sales for Tax Purposes

% of Firms with Line of

Credit or Loans from

Financial Institutions

Number of Power

Outages in a Typical

Month

If a generator is used,

Electricity from

Generator (%) *

Yemen Region

World Bank Enterprise Survey 2010

igure 8


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Economic Growth in Yemen & the World 1999-2012

ank, World Development Indicators (2011), IMF World Economic Outlook(2011), and Economist Intelligence Unit, Yemen Country Reports (various years).

%

Yeme

Worl

-1

0

1

2

3

4

5

6

7

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

igure 9


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Per Capita Economic Growth in Yemen

& the World 1999-2012

igure 10

ank, World Development Indicators (2011), IMF, World Economic Outlook(2011), and Economist Intelligence Unit, Yemen Country Reports (various years).

%

Yemen

Worl

-2

-1

0

1

2

3

4

5

6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


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Per Capita Economic Growth in Yemen

& Advanced Middle East and North Africa, 1999-2012

igure 11

ank, World Development Indicators (2011), IMF, World Economic Outlook(2011), and Economist Intelligence Unit, Yemen Country Reports (various years). Advanced MENA is Lebanon, Morocco, and T

%

Yemen

Advance

MENA

-2

-1

0

1

2

3

4

5

6

7

8

9

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


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0

10

20

30

40

50

60

70

80

90

100

Fuel exports as a % of total

exports

Food imports as a % of total

imports

Internet usage (% of

population)

Yemen

Middle East/North Africa

Sub-Saharan Africa

Western Europe

Global Economic Integration

Percentage

Source: World Bank, World Development Indicators (2009) .

gure 12


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Oil Production in Yemen, 1999-2020

igure 13

-100

0

100

200

300

400

500

Projected ProductionBarrels/Day

omist Intelligence Unit , Yemen Country Reports (various years). 2011-2012 estimates are from EIU; estimates beyond 2012 are extrapolated.


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Yemen Oil Exports 1999-2012(U.S. $)

Figure 14

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

illions

USD

omist Intelligence Unit, Yemen Country Reports (various years).


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Oil Production and Export Revenue Yemen, 1999-2020

0

100

200

300

400

500

600

700

800

900

0

50

100

150

200

250

300

350

400

450

500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Oil Production

Projected Production

Oil Export Revenue

gure 15


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The Price of OilInflation Adjusted

igure 16

Energy information Administration, World Database (2011).

D

0.00

0.00

0.00

0.00

0.00

0.00

0.00


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Yemen Food Imports

1996-2009

igure 17

World Bank, World Development Indicators (2011).

0

0.5

1

1.5

2

2.5

3

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Billions($)


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Food Price Index

igure 18

ood and Agricultural Organization , United Nations (2011).

0.0

50.0

100.0

150.0

200.0

250.0

1/1990

7/1990

1/1991

7/1991

1/1992

7/1992

1/1993

7/1993

1/1994

7/1994

1/1995

7/1995

1/1996

7/1996

1/1997

7/1997

1/1998

7/1998

1/1999

7/1999

1/2000

7/2000

1/2001

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1/2003

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1/2004

7/2004

1/2005

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1/2006

7/2006

1/2007

7/2007

1/2008

7/2008

1/2009

7/2009

1/2010

7/2010

1/2011


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Current Account Balance Yemen

1999-2012

igure 19

Economist Intelligence Unit, Yemen Country Reports (various years).

-15

-10

-5

0

5

10

15

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

ofDP


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Budget Balance Yemen

1999-2012

igure 20

Economist Intelligence Unit, Yemen Country Reports (various years).

-15

-10

-5

0

5

10

15

20

25

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

ofDP


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0

1000

2000

3000

4000

5000

Yemen Middle

East/North

Africa

Sub-Saharan

Africa

Western

Europe

South Asia

Fresh water per capita

Natural Resource Constraints

Percapitacubicmeter

s


gure 21


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Top six water depleting countries of The World

of

untry

fected by

eruse

Overall Rate of Water Depletion

gure 22

Libya

UAE

Saudi Arabia

Kuwait

Yemen

Qatar

0

10

20

30

40

50

60

70

80

90

100

0 2 4 6 8 10 12 14


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Water depleting countries of The World (less top four)

Yemen

Qatar

Uzbek

Turkmen

Egypt

Jordan

Iraq

Syria

Oman

Israel

Pakistan

Tajikistan

Iran

Tunisia

Sudan

Algeria

Belgium

Morocco

Kyrgyzstan

Bulgaria

0

10

20

30

40

50

60

70

80

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8

of

untry

fected by

eruse

Overall Rate of Water Depletion

gure 23


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newable

. Meter

ater/

habitant


Renewable Water Resources Per Capitagure 24

United Arab Emirates

Saudi Arabia

Egypt, Arab Rep.

Qatar

Jordan

Yemen, Rep.

0

20

40

60

80

100

120

140

160

180

200

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


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-30

-70

-130

-180

-270

0

2

4

6

8

10

12

14

16

18

-300

-250

-200

-150

-100

-50

0

1970 1980 1990 2000 2010

x

100000

Meters Population

Well Depth and Population in Sanaa

WellDepthMeters)

Popula

igure 25


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0

10

20

30

40

50

60

70

80

90

% adult literacy % tertiary

enrollment

% economic activity

Female

Male

Gender Disparities in Yemen

Percentage


gure 26


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Youth in Yemen(age 15-29)

58

24

18

14 15

71

0

10

20

30

40

50

60

70

80

Working Student - Full Time Not in workforce or student

Young Men Young Women

Silatech & Gallup 2010

gure 27


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0

5

10

15

20

25

30

35

40

4550

55

60

65

70

Amran

Al-Jawf

Al-Bayda

Lahj

Hajjah

Abjan

AdDalli

Shabwah

Marib

Hadramout

Al-Mahwit

Raymah

Taizz

Al-Hudaydah

Ibb

Sana'a

Dhamar

Sa'ada

Aden

Sana'aCity

Al-Maharah

RURAL

URBAN

ALLYEMEN

Absolute Poverty Prevalence2005/6 versus 2010

Percentageofpopulation

2005/6

2010

Source: IFPRI, National Food Security Strategy, Part 1, February 2010; WFP, CFSS, 2010.

igure 28


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Food Security in YemenTotal Exports/ Food Imports

igure 29


TotalExports

33% of export revenue devoted to food import

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Food

mports


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Global Hunger Index vs. Per Capita Income in MENA

Algeria

Egypt

Jordan

Lebanon

Libya

Morocco

Saudi Arabia

Tunisia

Yemen

Syria

0

5000

10000

15000

20000

25000

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Income

Per

Capita

Global Hunger Index

gure 30


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0

5

10

15

20

25

30

35

40

45

50

55

60

Severe

Percen

tageofpopulationbyGove

rnorate

Food Insecure

Borderline

Food Insecurity in Yemen

World Food Program, Yemen Comprehensive Food Security Survey(March 2010).

gure 31


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Raymah

Hajjah

Ibb Ad Dalli Amran

Al-MahwitAl-Bayda

TaizzLahj

Marib

AbjanAl-Hudaydah

ShabwahDhamar

Sana'aAdenAl-Maharah

HadramautSana'a City

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

of population

ith foodsecurity

% of population in absolute poverty

gure 32Food Insecurity vs. Absolute Poverty

Source: IFPRI, National Food Security Strategy, Part 1, February 2010; WFP, CFSS, 2010.


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0 20 40 60 80 100

Increase in food prices

Lack of rainfall

Lack of drinking water

High health expenditures

High fuel/transportation prices

Lack of water for irrigationFood Insecure Households

Food Secure Households

Percentage of households interviewed

Source: WFP, Yemen Comprehensive Food Security Survey, 2010.

Household Perceptions of Most Significant Difficulties, 2009gure 33


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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica

SeeAppendixfordatasourcesandexplanations.

1.EconomicReforms,200910BusinessEnvironment(1to183)

Turkey 65

Morocco 114Egypt 94Lebanon 113Yemen 105WestBank/Gaza 135Syria

144

Iraq 166

MCP Regulatory MCP Government MCP Budget Mscore1 Quality( score1 Effectiveness score1 Balance,3yr sco

3.77 0.31 3.40 0.35 3.17 3.6 1Tunisia 55Algeria 136Jordan 111

to5 2.5to2.5) to5 (2.5to2.5) to5 avg.(%ofGDP) to

3.81 0.10 3.14 0.41 3.25

2.9 21.92

0.94 1.86

0.59 2.03 9.8 52.62 0.36 3.46 0.28 3.09

10.1 12.45

0.01 3.01

0.11 2.61

2.0 22.94

0.14 2.85

0.30 2.38

7.1 12.57

0.07 2.94

0.67 1.93

8.6 12.7

0.60 2.28

1.12 1.38

6.0 11.99 0.12 2.87 0.87 1.69

1.72 1.07

1.70 0.61

2.01 3.6

11.19 1.03 1.74 1.26 1.22


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Tablesf

1A.BudgetBalance,3yearaverage(%ofGDP)

2006 2007 2008 2009 2010 3yearaverage MCPscoreAlgeria 13.9 6.1 9.3 9.8 5.0Morocco

2.1 0.2 0.4

2.1

4.3

2.0 2.0Tunisia

2.7

2.8

0.8

3.0

5.0

2.9 2.0Syria

3.5

3.1

2.5

3.9

4.5

3.6 1.5Turkey

0.6

1.6

1.8

5.5

3.6

3.6 1.5Egypt

8.2

7.3

6.8

6.6

8.0

7.1 1.0Jordan 7.0

7.9

9.6

12.3

8.4

10.1 1.0Lebanon 13.5

10.3

9.7

8.6

7.4

8.6 1.0Yemen 1.0

5.9

3.7

9.3

4.9

6.0 1.0Iraq WestBank/Gaza



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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica


2.GoverningJustlyandDemocratically,200910PoliticalRights(1to7)

Turkey 3

Algeria 6Tunisia 7Yemen 6Iraq 5Syria 7

MCP MCP Media MCP Ruleof MCPscore1to CivilLiberties score1 Freedom score1 Law(2.5 score1

5 (1to7) to5 (1to100) to5 to2.5) to53.67 3 3.67 51 2.86 0.12 3.02

Jordan 6Lebanon 5Morocco 5Egypt 6WestBank/Gaza 6

1.67 5 2.33 63 2.21 0.38 3.342.33 3 3.67 55 2.64

0.64 2.09

2.33 4 3.00 66 2.04

0.16 2.68

1.67 5 2.33 60 2.37

0.03 2.84

1.67 5.5 2.00 0.37 2.42

1.67 5 2.33 64 2.15

0.73 1.97

1.00 5 2.33 85 1.00 0.22 3.141.67 5 2.33 80 1.27

1.15 1.45

2.33 6 1.67 65 2.10 1.83 1.00 1.00 6 1.67 83 1.11 0.47 2.30


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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica3.EconomicGrowthandPerformance,200910

GDPperCapitaGrowth(%,5yearavg.)

MCPscore1to5

Macro

stabilityMCPscore1to5

FDI(%ofGDP,5yearavg.)

MCPscore1to5

ExportsMCPscore1to5

EnergySecurityMCPscore1to5

UnevenDevelopment(1to10)

MCPscore1to5

Environ

Sustain

(25toJordanLebanonTunisiaMoroccoEgyptAlgeriaTurkeySyriaYemenIraqWestBank/Gaza

4.42 3.32 3.50 14.16 4.91 3.07 1.54 7.2 2.13 353.75 2.97 3.29 11.9 4.28 2.55 3.01 7.2 2.13 383.53 2.86 3.74 5.2 2.44 3.31 2.945 7 2.25 43.18 2.67 4.09 2.8 1.77 2.91 2.64 7.6 1.88 573.9 3.03 3.67 5.83 2.61 2.05 2.45 7.4 2.00 60.

1.33 1.70 4.75 1.29 1.36 2.29 3.99 7.1 2.19 672.42 2.27 3.56 2.5 1.69 2.32 2.825 7.8 1.75 461.77 1.93 4.05 2.43 1.67 2.23 2.11 7.8 1.75 550.88 1.46 3.45 2.87 1.79 1.00 3.16 8.6 1.25 611.40 1.74 1.45 1.4 1.00 2.495 8.8 1.12 421.32 1.70 1.16 1.32



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Tablesf

3A.MacroeconomicstabilityExternalDebt(%ofGDP)

MCPscore1to5

Inflation(%,3yearavg.)

MCPscore1to5

CurrentAccountBalance(3yearavg.)

MCPscore1to5 AverageMCPScore

Algeria 3.83Morocco 26.43Syria 10.28Tunisia 58.16Egypt,ArabRep. 17.64Turkey 41.20Jordan 28.30Yemen 25.50Lebanon 70.70Iraq West

Bank/Gaza

5.00 3.70 4.26 14.40 5.00 4.754.65 2.10 4.58

3.57 3.05 4.095.00 7.08 3.58 0.63 3.58 4.053.82 3.39 4.32

3.29 3.09 3.744.88 11.35 2.73 0.8 3.40 3.674.26 7.54 3.49

4.65 2.92 3.564.60 6.65 3.67

10.26 2.22 3.504.68 9.63 3.07

7.11 2.61 3.453.49 1.86 4.63

14.00 1.75 3.29 29.29 3.28

28.69

1.00



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Tablesf

3B.ExportsExportshareofGDP(%)

MCPscore1to5

HiTechExports(%oftotalexports) MCPscore1to5

ManufacturingExports(%oftotalexports)

MCPscore1to5

AverageMCPScore

Tunisia 28.4 3.70 3.49 1.68 75.40 4.33 3.31Jordan 23.8 3.40 0.67 1.1 73.30 4.24 3.07Morocco 15.6 2.46 0.0 1.0 65.45 3.88 2.91Lebanon 12.2 1.75 0.0 1.0 72.45 4.20 2.55Turkey 12.7 1.72 1.41 1.3 80.20 4.55 2.32Algeria 2.3 2.94 0.0 1.0 1.56 1.00 2.29Syria 18.5 2.65 0.0 1 33.00 2.40 2.23Egypt,ArabRep. 33.0 2.22 0.0 1.0 37 2.75 2.05Iraq 0.0 1.0 0.17 1.00 1.00Yemen 0.01 1.0 1.67 1.00 1.00WestBank/Gaza



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Tablesf

3C.EnergySecurityEnergyImports(%ofenergyuse)

MCPscore1to5

EnergyEfficiency(GDPperunitofenergyuse) MCPscore1to5 AverageMCPScore

Algeria

345.70Yemen

128.80Lebanon 94.80Tunisia 10.59Turkey 72.73Morocco 95.45Iraq 216.90Egypt,ArabRep.

22.34Syria 24.00Jordan 96.15WestBank/Gaza

4.50 6.72 3.48 3.992.79 6.82 3.53 3.161.02 10.53 5.00 3.011.68 8.22 4.21 2.951.19 8.74 4.46 2.831.01 8.34 4.27 2.643.48 2.69 1.51 2.501.94 5.67 2.97 2.451.96 4.22 2.26 2.111.01 3.84 2.07 1.54

SeeAppendix

for

data

sources

and

explanations.


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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica4.InvestinginPeople,200910

Under

fivemortality(per1,000)

Lebanon 12Turkey 20Tunisia 21Jordan 25Algeria 32Egypt 21Syria 16Morocco 38Iraq 44Yemen 66WestBank/Gaza 30

MCP MCP Health MCP Environmental MCPscore Life score1 Expenditures score Health(25to score11to5 Expectancy to5 (%ofGDP) 1to5 100) to5

4.80 72.0 4.14 8.82 3.88 77.30 4.274.60 71.9 4.12 4.98 2.00 74.50 4.124.60 74.3 4.42 5.96 2.48 77.20 4.264.50 72.7 4.22 8.90 3.92 76.70 4.234.30 72.4 4.18 4.36 1.70 67.58 3.784.57 70.1 3.90 6.26 2.63 63.04 3.554.70 74.2 4.41 3.59 1.33 73.70 4.084.20 71.3 4.05 4.98 2.00 73.40 4.074.10 67.9 3.63 2.50 1.00 39.60 2.383.50 62.9 3.00 3.88 1.47 35.00 2.154.40 73.5 4.31


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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica4.InvestinginPeople,200910(Continued)

LebanonTurkeyTunisiaJordanAlgeriaEgyptSyriaMoroccoIraqYemenWestBank/Gaza

Literacy MCP Educational MCP MCP MCPRate score1 Expenditures score1 PerCapita score1 Gender(0 score1(%) to5 (%ofGDP) to5 Income,PPP to5 to1) to5

89.6 4.35 2.05 1.03 13400 4.5 88.7 4.29 2.86 1.56 13500 4.5 0.621 2.14078.0 3.62 7.19 4.38 7810 2.5 0.515 2.96092.2 4.51 5730 2 0.616 2.18072.6 3.28 4.27 2.48 8110 2.5 0.594 2.35066.5 2.89 3.76 2.15 5680 2 0.714 1.43183.6 3.97 4.85 2.86 4620 1.5 0.687 1.64056.4 2.26 5.71 3.42 4400 1.5 0.693 1.59077.6 3.59 3330 1.5 0.751 1.15060.9 2.54 5.22 3.10 2330 1.0 0.853 1.00094.1 4.63 SeeAppendixfordatasourcesandexplanations.


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Tablesf

MonitoringCountryProgressintheMiddleEast&NorthAfrica5.Peace&Security,200910

Counter

terrorism(MCPscore1to5)

CombatingWeaponsof

MassDestruction(MCPscore1

to5)

StabilizationOperationsandDefenseReform,

(MCPscore1to5)

Counter

narcotics(MCP

score1to5)

Trans

nationalCrime(MCPscore1to5)

ConflictMitigation(MCPscore1

to5) TotaGhana 4.0 3.0 3.8 3.4 3.4 4.7Ukraine 3.5 5.0 3.1 2.5 2.3 3.0Morocco 3.1 3.0 3.5 3.2 2.9 3.2Albania 3.0 2.0 4.4 2.7 3.0 3.8Mongolia 3.8 2.0 3.6 2.5 3.2 3.7Uganda 2.0 3.0 2.4 3.5 3.1 3.5Peru 2.8 3.0 3.3 2.6 2.5 3.2SriLanka 2.6 3.0 2.4 3.6 2.8 2.3Cambodia 3.3 3.0 2.8 2.6 2.4 2.7Ecuador 2.5 3.0 2.3 2.3 2.4 3.8Egypt 2.6 2.0 3.4 2.9 2.4 2.5Bangladesh 2.3 3.0 3.1 2.7 2.5 2.0Ethiopia 2.8 3.0 2.0 3.1 3.0 1.7Philippines 1.5 3.0 2.3 2.8 1.9 3.2Sudan 1.3 3.0 2.0 3.8 3.1 1.3Russia 2.0 3.7 2.2 2.7 1.6 2.2Yemen 1.3 1.7 2.3 3.0 2.5 2.3India 1.3 3.0 2.4 2.3 1.9 2.0Afghanistan 1.0 2.0 3.0 2.4 2.2 1.3Iraq 1.0 1.0 2.3 2.3 2.4 1.7Burma 1.8 2.0 2.0 2.3 2.0 1.0Pakistan 1.1 1.0 1.8 2.0 1.5 1.7



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YemenGapAnalysisAppendixApril2011Thisappendixincludes:(1)ageneraloverviewoftheMonitoringCountryProgress(MCP)system;(2)indicatordefinitionsofthecomponentsoftheMCPindices;(3)anexplanationofthemethodusedtoconverttheinitialdatatoa1to5scale;and(4)theweightingschemesforeachoftheMCPindices.

GeneralOverviewoftheMCPsystemThecoreoftheMCPsystemconsistsoffiveindices:(1)economicreforms;(2)governingjustlyanddemocratically;(3)macroeconomicgrowthandperformance;(4)investinginpeople;and(5)peaceandsecurity.Foreachindex,primarydataareconvertedtoa1to5scale,wherea1representstheworstcountryperformancesonthatindicatorworldwideanda5representsthebestworldwide.Threeindices(economicreforms,governingjustlyanddemocratically,andpeace&security)arecalculatedbyequallyweightingthecomponents.Theweightingschemesfortheothertwoindices(economicgrowthandperformance,andinvestinginpeople)aremorecomplexandattempttoreflectaniterativeprocessofanalysisandfeedbackamongmanycolleaguesintheU.S.governmentandbeyond.Figures13providethespecificsoftheweightingschemesforeachofthefiveindices.MCPdrawsonpubliclyavailablestandardized(i.e.,crosscountry)datafromavarietyofsourcesincludinginternationalorganizations(suchastheWorldBank,theInternationalMonetaryFund,theWorldHealthOrganization(WHO),theUnitedNationsOfficeonDrugsandCrime(UNODC),andtheUnitedNationsChildrenFund(UNICEF)),variousU.S.governmentsourcesandreports(suchasfromUSAID,U.S.DepartmentofState,U.S.DepartmentofCommerce,U.S.DefenseDepartment,andU.S.TradeRepresentative),aswellasthinktanksanduniversities(suchas FreedomHouse,TransparencyInternational,FundforPeace,BinghamtonUniversity,andGeorgeMasonUniversity).SequencingofprogressbythesectorsisanimportantaspectintheMCPsystemapplication.First,sufficientprogressinpeaceandsecurityneedstoprecedeorattheleastaccompanyprogressineconomicanddemocraticreforms.Second,progressineconomicanddemocraticreformsneedstoprecedeorattheleastaccompanymacroeconomicperformanceandinvestinginpeople.CountriesmaydorelativelywellontheMCPmacroeconomicperformanceandinvestinginpeoplescoresintheabsenceofadequatereformprogress,butsuchconditionscannotbesustainedoverthelongtermwithoutreformprogress.

1


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Additionally,sustainabilityofthegainsinanyonesector(oranyoneindex)islesslikelytooccurifothersectorsarelaggingconsiderably. Thesustainabledevelopmentpathnecessarilyinvolveseconomicanddemocraticreformsprogressingtogetherinthemediumtermifnotyeartoyear;similarly,relativelybalancedresultsandprogressareneededbetweeneconomicperformanceandinvestinginpeople.

IndicatorDefinitionsoftheComponentsoftheMCPIndices1. EconomicReformsIndex

(1)Businessenvironment.ThisindicatorisanaveragerankofninebusinessenvironmentareasmeasuredbytheWorldBanksDoingBusiness.Eachofthesenineareasinturnisanaveragerankingofanumberofcomponents:(1)startingabusinessaveragesthecountryrankingsofprocedures,days,costandminimumcapitalrequirement

to

register

abusiness;

(2)

dealing

with

construction

permits

averages

the

countryrankingsofnumberofprocedurestogetalicense,numberofdaystogetit,andthecost;(3)registeringpropertyisanaveragerankbasedonprocedures,timeandcosttoregisterproperty;(4)accesstocreditincludescreditinformationavailabilityandlegalrightsforborrowersandlenders;(5)protectinginvestorsrankstheWorldBanksdisclosureindex(whichmeasurestheextenttowhichbusinessesdiscloseownershipandfinancialinformation);(6)payingtaxesincludesnumberofpaymentsperyear;hoursperyearindealingwithtaxes,andthetotaltaxrate;(7)tradingacrossbordersincludesthenumberofdocumentsneededtotrade,thetimeandcostinvolvedindealingwiththebureaucracy;(8)enforcingcontractsaveragesthecountryrankingsontheprocedures,timeandcosttoenforceanoverduepaymentthroughthecourts;and(9)closingabusinessisanaveragerankofthetime,cost,andrecoveryratetocloseabusinessviabankruptcy.Possiblescore:1to183.2009data.(2)Regulatoryquality.ThisindicatorisfromtheWorldBankInstitute(GovernanceMatters)andisanindexofsurveyswhichattemptstomeasuretheincidenceofmarketunfriendlypoliciessuchaspricecontrolsorinadequatebanksupervision,aswellasperceptionsoftheburdensimposedbyexcessiveregulationinareassuchasforeigntradeandbusinessdevelopment.Possiblescore: 2.5to2.5.2009data.(3)Governmenteffectiveness.ThisindicatorisalsofromtheWorldBankInstitute(GovernanceMatters).Itisanindexofsurveysthatratescountriesonthequalityofpublicserviceprovision,thequalityofthebureaucracy,thecompetenceofcivilservants,theindependenceofthecivilservicefrompoliticalpressures,andthecredibilityofthegovernment'scommitmenttopolicies.Possiblescore: 2.5to2.5.2009data.

2


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(4)Centralgovernmentbudgetbalance.BudgetbalanceequalscentralgovernmentrevenuesminusexpendituresasapercentofGDP.PrimarysourceistheWorldBanksWorldDevelopmentIndicators.2009data.(5)TradeLiberalization.ThisindicatorfromtheHeritageFoundation,IndexofEconomicFreedom,attemptstomeasuretheextentofacountrystariffandnontariffbarriers.Possiblescore:1to100.2009data.

2. GoverningJustlyandDemocraticallyIndex(1)Politicalrights.ThisindicatorcomesfromFreedomHousesannualFreedomintheWorld.Politicalrightsareratedbyindependentexpertsandincludetheextenttowhichelections(nationalandlocal)arefree,fair,andcompetitive;theabilityofcitizenstoformpoliticalparties;freedomfromdominationbythemilitary,foreignpower,totalitarianparties,religioushierarchiesandeconomicoligarchies;andpoliticalrightsoftheminoritygroups.Twogeneralcriteriaareusedtorateprogress:policy(thelaws)andpractice(theimplementationoflaws).Possiblescore:1to7.2010data.(2)Civilliberties.ThisisalsofromFreedomHousesFreedomintheWorld.Independentexpertsratefreedomofexpression;associationandorganizationalrights;ruleoflawandhumanrights;andpersonalautonomyandeconomicrights.Twogeneralcriteriaareusedtorateprogress:policy(thelaws)andpractice(theimplementationoflaws).Possiblescore:1to7.2010data.(3)Mediafreedom.ThisFreedomHouseindicatorisassessedworldwideannuallyinFreedomofthePress.Countriesarescoredonthebasisof23questionsdividedintothreesubcategories:(1)legalenvironment(anexaminationofthelawsandregulationsthatcouldinfluencemediacontentandthegovernmentsinclinationtousetheselawsandlegalinstitutionstorestrictthemediasabilitytooperate);(2)politicalenvironment(anevaluationofthedegreeofpoliticalcontroloverthecontentofnewsmedia);and(3)economicenvironment(anexaminationofthestructureofmediaownership;transparencyandconcentrationofownership;thecostsofestablishingmediaaswellasofproductionanddistribution;theselectivewithholdingofadvertisingorsubsidiesbythestateorotheractors;theimpactofcorruptionandbriberyoncontent;andtheextenttowhichtheeconomicsituationinacountryimpactsthedevelopmentofthemedia).Possiblescore:0to100.2010data.(4)Ruleoflaw.ThisWorldBankInstituteindicatorisanindexofsurveysthatratescountriesontheextenttowhichthepublichasconfidenceinandabidesbyrulesofsociety;incidenceofviolentandnonviolentcrime;effectivenessandpredictabilityofthejudiciary;andtheenforceabilityofcontracts.Possiblescore: 2.5to2.5.2009data.(5)Controlofcorruption.FromtheWorldBankInstitute,thisindexofsurveysratescountriesonvariousformsofcorruption,includingpettyandgrandcorruptionandstate

3


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capture(whichistheprivatesectorcapturingthestatebyillegallyinfluencingtheimplementationoflaws).Possiblescore: 2.5to2.5.2009data.

3. MacroeconomicPerformanceIndex(1)GDPpercapitagrowth.Thisindicatorismeasuredasafiveyearaverage;WorldBank,WorldDevelopmentIndicators.20052009averagedata.(2)Macroeconomicstability. Thisindexincludesthreeindicators:inflation(threeyearaverage,20072009data,consumerpriceindex),WorldBank,WorldDevelopmentIndicators;externaldebt(asapercentageofGDP,2009data),WorldBank,WorldDevelopmentIndicators;andcurrentaccountbalance(threeyearaverage,20072009data),WorldBank,WorldDevelopmentIndicators.(3)Foreigndirectinvestment.ThisindicatormeasuresaveragenetflowsasapercentofGDPfiveyearaverage,20052009data;WorldBank,WorldDevelopmentIndicators.(4)Exports.Thisindicatorcombinesthesizeoftheexportsector(exportshareofGDP,2008data)withthecompositionofexports(manufacturedexportaspercentoftotalexports,2009data,andhightechexportsaspercentoftotalexports,2008data);WorldBank,WorldDevelopmentIndicators.(5)Energysecurity.Thisindexcombinesenergydependency(netenergyimportsaspercentofenergyuse)withenergyefficiency(GDPperunitofenergyuse);WorldBank,WorldDevelopmentIndicators.2007data.(6)Unevendevelopment.Thisindicatorattemptstomeasureeconomicdisparitiesbetweenethnicandreligiousgroups.ItisfromtheFundforPeacesFailedStatesIndexandmeasuresgroupbasedimpoverishmentasmeasuredbypovertylevels,infantmortalityrates,educationallevels;andtheriseofcommunalnationalismbasedonrealorperceivedgroupinequalities.Thefundusesconflictassessmentsystemtoolsoftwarewhichindexesandscanshundredsofthousandsofopensourcearticlesandreports;internalandexternalexportsreviewthescoresgeneratedfromthesoftwaretoimproveaccuracy. Possiblescore:1to10.2009data.(7)Environmentalsustainability.Thisindicatorisanindexoffivecomponentswhichattempt

to

measure

ecosystem

vitality

and

natural

resource

management:

(1)

biodiversityandhabitat;(2)sustainableenergy;(3)airquality;(4)waterresources;and(5)productivenaturalresources.Source:YaleCenterforEnvironmentalLaw&PolicyandColumbiaUniversityCenterforInternationalEarthScienceInformationNetwork,TheEnvironmentalPerformanceIndex.Possiblescore:25to100.2010data.(8)Domesticcredit.ThisindicatormeasuresdomesticcreditaspercentofGDP;WorldBank,WorldDevelopmentIndicators.2008data.

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4. InvestinginPeopleIndex(1)Underfivemortalityrate.Deathsofchildrenundertheageoffiveper1,000livebirths;WorldBank,WorldDevelopmentIndicators.2008data.(2)Lifeexpectancy.Numberofyearsoflifeexpectancy;WorldBank,WorldDevelopmentIndicators.2008data.(3)Publichealthexpenditures.GovernmentexpendituresinhealthaspercentageofGDP;WorldBank,WorldDevelopmentIndicators.2007data.(4)Environmentalhealth.Anindexoffiveindicators:urbanparticulates;indoorairpollution;drinkingwater;adequatesanitation;anddisabilityadjustedlifeyears(DALYs).Source:YaleCenterforEnvironmentalLaw&PolicyandColumbiaUniversityCenterforInternationalEarthScienceInformationNetwork.TheEnvironmentalPerformanceIndex.Possiblescore:25to100.2010data.(5)Combinedgrosseducationenrollmentrates.Percentageincludesprimary,secondary,andtertiaryrates.Source:UNDP,HumanDevelopmentReport.2008data.(6)Literacyrate.Percentageofthepopulationthatisliterate;WorldBank,WorldDevelopmentIndicators.2008data.(7)Publiceducationexpenditures.GovernmentexpendituresineducationaspercentageofGDP;WorldBank,WorldDevelopmentIndicators.2007data.(8)PercapitaGDP.Inpurchasingpowerparity;WorldBank,WorldDevelopmentIndicators.2008data.(9)Genderequality.Anindexwiththreedimensions:reproductivehealth(maternalmortalityrateandadolescentfertilityrate);empowerment(shareofparliamentaryseatsheldbyeachsex);andlabormarket(attainmentatsecondaryandhighereducationbyeachsex,andlabormarketparticipationratebyeachsex).Source:UNDP,HumanDevelopmentReport.Possiblescore:0to1.2008data.

5.

Peaceand

Security

Index

ThesixcomponentsofthisindexaredrawnfromtheDirectorofForeignAssistancesconceptualframeworkofpeaceandsecurity.FurtherelaborationisprovidedinJ.SwedbergandR.Sprout,PeaceandSecurityinEasternEurope&Eurasia,USAID/E&EWorkingPaperSeries,No.10(October2009).

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(1)Counterterrorismisanindexoffourindicatorsandmeasurestheincidentsandseverityofterrorismaswellasthecapacityofgovernmentstoavertorcontrolterrorismand/orthelikelihoodofpoliticalinstabilitystemmingfromterrorism. SourcesincludetheU.S.DepartmentofState,CountryReportsonTerrorism,andtheNationalCounterTerrorismCenter,WorldwideIncidentsTrackingSystem.20092010data.(2)Combatingweaponsofmassdestructionconsistsofthreeindicatorsandmeasurestheextenttowhichgovernmentsareabletocontrolandregulatetheexportofchemical,biological,andnuclearweapons.SourcesincludeU.S.DepartmentofCommerce,ExportAdministrationRegulations,andtheU.S.DepartmentofState,BorderSecurityAssessment.Primarily20092010data.(3)Stabilizationoperationsandsecuritysectorreformconsistsoffivecomponentsandmeasuresthecapacity,scope,andintentofagovernmentssecuritysectoraswellasestimatesofthedomesticsecurityenvironmentandstatus.SourcesincludetheCenterofInternationalDevelopmentandConflictManagement,UniversityofMaryland,PeaceandConflictInstabilityLedger;USAIDDCHA/CMM,InstabilityAlertList;SUNYatBinghamton,CingranelliRichardsHumanRightsDataset;UNICEF,TransMONEEdatabase;WorldBank,WorldDevelopmentIndicators;andA.T.Kearney/ForeignPolicyMagazine,GlobalizationIndex.Primarily20082009data.(4)Counternarcoticsconsistsoffourindicatorsandmeasuresboththedemandandsupplyofthefourmajortypesofnarcotics:opiates,cocaine,cannabis,andamphetamines.Sources:UNODC,WorldDrugReport,andU.S.DepartmentofState,InternationalNarcoticsControlStrategyReport.20062010data.(5)Combatingtransnationalcrimeconsistsoffiveindicatorsandmeasurestheextentoftraffickinginpersons,piracyofintellectualpropertyrights,narcotics,andmoneylaunderingaswellasthecapacityofgovernmentstoaddresstheseconcerns.SourcesincludetheU.S.DepartmentofState,TraffickinginPersonsReport;U.S.TradeRepresentative,Special301Report,IntellectualProperty;theU.S.DepartmentofState,InternationalNarcoticsControlStrategyReport;andtheFundforPeace/ForeignPolicyMagazine,FailedStatesIndex.20092010data.(6)Conflictmitigationconsistsofthreeindicatorsandmeasuresthepotentialorvulnerabilityofgovernmentstowardconflictandstatefailurebytakingstockofinstability,

conflict

history

of

the

country,

and

the

potential

for

conflict

among

neighborhoodcountries.SourcesincludetheCenterforGlobalPolicy,GeorgeMasonUniversityandthePoliticalInstabilityTaskForce;USAIDDCHA/CMM,FragilityAlertList;andCenterofInternationalDevelopmentandConflictManagement,UniversityofMaryland,PeaceandConflict2010.20092010data.

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ConvertingthePrimaryDataintoa1to5ScaleForeachindicator,a5representsthebestperformanceworldwide;thatis,alevelofprogresswhichcorrespondstothelowerboundresultsofthetop5%ofcountryperformancesworldwide.A1representstheworstperformanceworldwide;thatis,alevelofprogresswhichcorrespondstotheupperboundresultsofthebottom5%ofcountryperformancesworldwide.The1to5spreadisdeterminedbytheminimummaximumnormalizationtechnique(seeOECDsHandbookonConstructingCompositeIndicators:MethodologyandUserGuide,2008,pages2730).Forindicatorsthatarepositivelycorrelatedwithdevelopment(i.e.,anincreaseinvalueindicatesdevelopment):

Forindicatorsthatarenegativelycorrelatedwithdevelopment(i.e.,adecreaseinvalueindicatesdevelopment):

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Appendix,Fig.1ComponentsandWeights

MCPGlobalEconomicReforms

BusinessEnvironment

20%

RegulatoryQuality20%

GovernmentEffectiveness

20%

TradeLiberalization

20%

BudgetBalance20%

GoverningJustly

and

Democratically

PoliticalRights20%

CivilLiberties20%

MediaFreedom20%

Corruption20%

RuleofLaw20%


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8%

LitRate11%

Education

CombinedEnrollments

12%

PerCapitaIncome(PPP)29%

Gender14%

Appendix,Fig.2

GDPGrowthpercapita22%

FDI11%

Inflation4%

CurrentAccountBalance

4%Debt4%

%ofHighTechExports

%ofManufactured

ExportsExportShareof

GDP5%

GDPperUnitEnergy5%

%ofEnergyUseImported

6%

UnevenDevelopment

11%

EnviromentalSustainability

11%DomesticCredit11%

ComponentsandWeightsMCPGlobal

MacroeconomicPerformance

3% 3%

InvestinginPeopleUnder5Mortality

LifeExpectancy8%

HealthExpenditure

4%Environmental

Health8%

Expenditure6%


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Counter

terrorism17%

Appendix,Fig.3ComponentsandWeights

MCPGlobalPeaceandSecurity

Counter

narcotics17%

TransnationalCrime17%

ConflictMitigation

17%

CombatingWeaponsof

MassDestruction

17%StabilizationsOperationsandSecuritySector

Reform17%

@usaidmena #yemen gap analysis april 2011

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