The Gulf Research Center (GRC)

and the

Arab Reform Initiative (ARI)

Joint workshops on

The Role of the Private Sector in Promoting Economic and Political Reform

  Jeddah; Riyadh – Kingdom of Saudi Arabia 

4 - 5 January, 2009

Experts’ views of the capabilities and the potential role of the private sector in promoting economic and political reform in the Arab world are sharply divergent. Some view the private sector as still being primarily subordinated to the government and depending on government expenditure or other forms of government protection to be able to achieve profit in business. It is pointed out that there is a lack of international competitiveness except in sectors, such as petrochemicals, which are formally privatized but in fact still closely controlled by government; a lack of transparency and openness to international investment; excessive dependence on government contracts or other business opportunities essentially influenced by government decisions and initiatives. A contrasting view has emphasized that the private sector in the Arab world has come a long way since its beginnings in the 1970s and has now acquired capabilities that it did not have in the past. Therefore, while the picture of a business sector subservient to the government might have been correct 30 or 40 years ago, it is no longer accurate today. Besides, many private business groups have also greatly increased their financial capabilities through international investment and are increasingly engaging in business that caters to open and fairly competitive markets. The declared strategy of Arab governments to increasingly rely on the private sector is opening further opportunities for private sector investment and growth, progressively tilting the balance in the equation.

Pointing to this development, the Gulf Research Center Foundation (GRCF) and the Arab Reform Initiative have launched a two-year research project entitled “The Role of the Private Sector in Promoting Economic and Political Reform,” to explore ways in which the Arab business community can contribute to the progress and modernization of the region. In a comparative analysis, several Arab countries, including the GCC states, are being assessed. The overarching aim of the project is to conduct research on the capabilities and attitudes of the private sector towards economic and political reform, opening the door to a more sophisticated understanding of the evolving reality. The active involvement and participation of the region’s business communities therefore is of crucial importance and constitutes an integral element in guiding the academic work.

The project got off to a start on January 4, 2009, with a workshop at the Jeddah Chamber of Commerce and Industry followed by a meeting at the Chamber of Commerce and Industry in Riyadh on January 5, 2009. Two introductory papers were presented which establish the framework for continuing debates. Dr. Steffen Hertog, Kuwait Program Chair at Sciences Po (Paris, France) and Senior Consultant at the Gulf Research Center, elaborated on private sector capabilities and the degree of government dependence/independence. In his paper “Private Sector and Public Policy Making” he described key parameters of the private sector and the significance and implications of the actual/potential role of the private sector in promoting economic and political reform. The ensuing debate evolved around the topic of how globalization and regional integration affect the relationship between public and private sector. Professor Giacomo Luciani, Director of the Gulf Research Center Foundation in Geneva, shed light on this subject paving the way for future discussions and wider and deepened policy debates.