by Somik Lall 1. Introduction

1. Introduction1

Spatial inequalities within countries in the Middle East and North Africa are greater than in comparable countries in other parts of the world. To mitigate these disparities, governments are undertaking significant capital investments in large-scale infrastructure, public service facilities, and industrial zones. Centralized systems of decision making and execution translate the idea of leaving no area behind into doing the same thing everywhere, undermining local preferences and accountability. Furthermore, political bias in spatial allocation of resources and limited capacity for design and implementation in lagging areas exacerbates spatial inequalities. For governments in the Middle East and North Africa to facilitate economic and social convergence, there is an urgent need to shift from building monuments to fixing governance and taking into account local feedback and preferences in investment planning and service delivery.

Rising spatial disparities within countries pose a major risk for economic growth and social inclusion in the Middle East and North Africa. Around the world, as countries move from low to high income, the importance of differences between regions in explaining inequality decreases, and the importance of differences between people within regions increases. Household consumption in the most prosperous areas of today’s low- and middle-income countries is more than double that of similar households in the lagging areas, compared with 50 percent in high-income countries (Grover, Lall, and Maloney 2022), but in the Middle East and North Africa—a region composed largely of middle-income countries— differences in household consumption between subnational regions contribute 63 percent more to total inequality than in comparable countries elsewhere (World Bank 2020a).

Decision makers in the region are well aware of spatial disparities and have taken steps to respond to the needs of people left behind. The development strategies and national plans of most Middle Eastern and North African countries prioritize enhancing welfare, improving the quality and efficiency of service delivery, and increasing equality. The objectives and pillars of the Vision 2030 strategies that Algeria, Egypt, Iraq, Qatar, and the United Arab Emirates released all emphasize these aspects. Recent national plans and government programs for Jordan, Morocco, Saudi Arabia, and Tunisia highlight the importance of reducing spatial imbalances in living standards. This is in line with citizen priorities; recent perception data confirm that citizens in the Middle East and North Africa believe it to be the top priority for their states to enable job creation and provide public services, with some evidence that this preference is especially pronounced in rural areas and low-income households (World Bank 2020a). Toward this end, governments have made large capital investments in transport corridors and “new cities.” Wishing to provide jobs in places with little economic activity, governments have designated new industrial zones supported by spatially targeted business incentives and subsidized land and energy.

Even so, disparities between capital cities and lagging areas continue to grow or are closing more slowly than would be expected given the volume of investment that governments have directed to those locations. Why? Although challenges vary across the region, government interventions are getting one thing wrong: they attempt to treat inequity’s spatial and physical symptoms, not its causes. Thus, to add jobs in a country’s poorer areas, policy makers try to push new production facilities into these areas, and to meet the need for decent homes and amenities, funds support mass housing projects. Neither effort has succeeded widely—because the causes of spatial exclusion are not themselves spatial and physical but are related to institutional and governance challenges.

1 The author thanks Roberta Gatti, Ernest Sergenti, and Ha Nguyen for their helpful comments.