(Illustration by Matt Mahurin.)

The participants who live in the region were in full agreement. In fact, over the past year a group of Middle Eastern business leaders, now numbering 77, has been working to create its own development initiatives through a WEF-sponsored committee called the Arab Business Council. This organization of private-sector business owners and executives represents a variety of industries that function outside of the government-owned conglomerates that dominate the oil industry. The council’s work is aimed at improving the economic competitiveness in the Arab world, as part of a wider push for economic, social and, eventually, political reform. They have set up a national council on competitiveness in Egypt, and have plans for similar councils in Morocco and Jordan.

The council members have been adamant that theirs be a movement focused on working from within the Arab world, without external pressures. They clearly do not welcome the involvement of Westerners, except as consultants.

They very clearly do not welcome the involvement of Westerners, except as consultants.

I have found business leaders from the Middle East to be well aware that there is an urgent need to foster growth, prosperity and stability in the region. In the Arab world, half of all women are illiterate, 10 million children do not attend school and per capita income shows the slowest growth rate in the world after sub-Saharan Africa. But to improve these conditions requires addressing a complex range of interrelated issues. Middle Eastern executives find it troubling that all of the Arab states combined receive less than 2 percent of the world’s foreign direct investment. Arab leaders seem to have recognized the insidious problem of corruption. Global organizations ranging from the Organisation for Economic Cooperation and Development to Transparency International have created a framework for setting up checks and balances against corruption, but there has not been a credible effort from inside the region to apply those standards.

Seeds of Change
To enact positive change, the Arab world must see active cooperation between the region’s governments and leading organizations to move toward liberal, market-oriented economic policies. This will require a significant improvement in educational and vocational training systems to create a work force fit for the global economy. Arab leaders must also make certain that the processes of governance are strengthened with more accountability and efficiency to reduce transaction costs, while providing more incentives for foreign or inter-Arab investments.

According to a World Bank report published in 2004, protectionism is more of a deterrent to economic growth in the Middle East than violence. The World Bank estimates that if only half of the region’s trade and private investment potential were to be realized over the next decade, per capita GDP growth would rise from the current 1 percent to about 4 percent per year.

The members of the Arab Business Council recognize that the most overwhelming challenge the region will face in the next 10 years is the lack of opportunities for a predominantly young and growing population. The Middle Eastern economy will have to create 80 million new jobs between now and 2017 simply to maintain unemployment at its already high levels. If the business and government sectors do not create an environment that is more competitive and more favorable to direct investment, the bleak prospects for young adults trying to enter the work force will continue to feed a channel of negative energy. That presents an alarming scenario for the entire world.

Those of us who have interests in the Middle East find the council a positive step. It offers the real prospect of responding to the aspirations of Arab people by delivering a coherent and structured reform package conceived from within Arab society.

Alan Boeckmann is chairman and chief executive officer of Fluor Corporation.