On Ideas and Economic Policy: A Survey of MENA Economists

On Ideas and Economic Policy:
A Survey of MENA Economists
Rana Hendy and Mahmoud Mohieldin
with
Joelle El Sawalhi & Rebecca Spriggs.

The findings, interpretations, and conclusions expressed
in this paper and presentation do not necessarily reflect
the views of the World Bank, the Executive Directors of
the World Bank or the governments they represent.
Disclaimer
2

1. A quick journey on ideas.
2. The impact of ideas on the formulation of economic policy:
- good ideas
- bad ideas
- catastrophes
3. On the disagreement of Economists.
4. A survey on MENA economists
- The making of MENA economists
- 13 question on economic policy
- Challenges and solutions
5. Concluding remarks and suggestions.
Outline of the Presentation
3

“… the ideas of economists and political philosophers, both when they are right and when they are
wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from any intellectual influences, are
usually the slaves of some defunct economist… I am sure that the power of vested interests is vastly
exaggerated compared with the gradual encroachment of ideas… But, soon or later, it is ideas, not
vested interests, which are dangerous for good or evil”.
Keynes (1936)
“To act on the belief that we possess the knowledge and the power which enables us to shape the
processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to
make us do much harm.”
Frederich August (1974)
On Ideas and Vested Interest

“Ideas when they are right and when they are wrong…”
5
Eugene Fama
2013 Nobel laureate in
economic sciences
Robert Shiller
economic sciences
James Tobin
economic sciences
Milton Friedman
economic sciences
Friedrich Hayek
economic sciences
John Maynard Keynes
British Economist
Adam Smith
Scottish Economist
Karl Marx
German Philosopher

Constructive confusion to the public?
6

Ideas, schools of thought and economic policy
Similarly, theory and policy, as noted by Skidelsky (2018), “are
moulded by the conditions of the times” with one major
exception of a topic.
John Stuart Mill (1806-1873):
“One of the most disputed questions both in political science
and in practical statesmanship at this particular period relates
to the proper limits of the function of the agency of
government. At other times it has been a subject of
controversy how governments should be constituted, and
according to what principles and rules they should exercise
their authority; but it is now almost equally a question to what
departments of human affairs that authority should extend”
Economists’ choice of study develop primarily from what John
Hicks (1904-1989) called ‘concentration of attention’
7

Arjo Klamer (1984) interviewed leading economists from
different schools of economic thought.
In the summary of these interviews he notes that “[they] are
the very best the discipline has to offer. They nonetheless
disagree fundamentally on theoretical and empirical questions,
on policy proposals and on the ways economic issues should be
studied and settled. At times, they even have difficulty
understanding each other”.
See Arjo Klamer’s book published in 1984 under the title: The New Classical Macroeconomics:
Conversations with New Classical Economists and Their Opponents.
He interviewed Robert Lucas Jr., Thomas Sargent and Robert Townsend from what he classified
as New Classical economists. He also interviewed James Tobin, Franco Modigliani and Robert
Solow from the older generation of the Neo-Keynsians and from the younger generation, Alan
Blinder and John Taylor. From the Monetarists he interviewed Karl Brunner and from what he
described as Nonconventional economists he interviewed David Gordon and Leonard Rapping. 8
Ideas, schools of thought and economic policy

Adapted from Stilwell (2012). Political economy: The contest of economic ideas. (p.384)
Different political philosophies, competing schools of economic thought and
influence
9
Institutional
position
Economic interest groups
e.g. corporations
Universities
Public service
Government
‘Think-
tanks’
Media
Professional
authority
Cognitive
infrastructure
and Hirschman & Popp Berham
Humanism
SocialismLiberalism
Libertarianism
(neo-liberalism)
Liberal
democracy
Social
democracy
Revolutionary
socialism
(Marx)(Galbraith)(Keynes)(Friedman)
Neoclassical economics
Keynesian economics
Institutional economics
Marxian economics

Austrian Behaviouralist Classical Developmentalist Institutionalist Keynesian Marxist Neoclassical Schumpeterian
On views of the viability
of capitalism
Conceptualizing the
individual
Theorizing groups-
classes
Understanding
economic systems
Exploring how
individuals and society
interact
On defending the free
market
On the need of
government intervention
Beyond markets
On technologies and
productivity
On the existence of
corporations
On unemployment and
recession
Adapted from Chang, H. (2015). Economics: The User’s Guide. 10
Better to have a portfolio of schools of thought and models

Benassy-Quere et al (2010) summarize the main tasks of economic policy makers in six categories:
1
Economic
legislation and
enforcing the rules
of the economic
system
Budgetary decisions
which include
taxation and public
expenditure (fiscal
policy)
Issuance of the
currency and the
choice of the
monetary and
exchange rate
regime (monetary
policy and central
banking)
Production of goods
and services-
primarily health and
education services
though some
governments still
own public
enterprises
Managing crises
and fixing
problems,
including through
trying to influence
private decisions
International
negotiation and
representation
2 3 4 5 6
11Source: Benassy-Quere et al (2010), Economic policy: Facts, theories and options.
Main tasks of economic policy makers

Stages of economic policy formulation
Max Hartwell’s five
stages and the role of
ideas, vested interests
and interest groups:
Identification of an issue and publicizing it by a thinker
or moral entrepreneur preaching for reform.01
In a democracy, a politician or the government may
persuade the parliament that the issue needs
investigation or legislation after public inquiry and
obtain a report about it.
02
The parliament debates and may accept the report and
hence passes a legislation to be enforced by
government bureaucracy or a regulatory agency.03
The concerned bureaucracy may provide feedback on
the new legislation and a chain reaction is created.04
The legislation will have a life of its own with
interactions with the concerned public and the
legislation will have its impact through cumulative
sequence depending on the dynamics of the sector or
domain that it addresses.
05
12
Source: Hartwell et al (1989), Ideas,
Interests & Consequences.

Impact of ideas of economists and political philosophers
Source: Olson (1989), Barry (1989)
01
02
03
04
Karl Marx and the Soviet Union
Keynes and Kennedy/Johnson tax cuts (US)
Change in tides… Hayek and Thatcher (UK)
1970s stagflation and Friedman (US)
13
1970s/80s Singapore as an idea Lee Kwan Yew (China) 05

Ricardo and the Repeal of the Corn Laws 1846
Three sets of economic ideas in three different areas:
Source: Mukand and Rodrik (2018), The Political Economy of Ideas: On Ideas Versus
Interests in Policymaking
The Laffer Curve and the Reagan Tax Cuts of 1981
The Great Recession of 2008: Austerity Economics and Keynesian Policies
14
Ideas vs. vested interests

Ideas, coincidence and/or conducive circumstances (luck?!)
Keynes and White’s global economic system
Three sets of economic ideas in three different areas:
Source: Rodrik (2015), Economics rules: The rights and wrongs of the dismal science.
Vickrey and congestion pricing
Levy and the first Conditional Cash Transfer program
15

Bad ideas
63
2
41
8
Dealing with
joblessness by relying
on the civil service
Underpaying civil servants
compared to the private
sector
Cutting fiscal deficits by
sacrificing public
investment in
infrastructure
Subsidizing energy except
for very limited subsidies
to highly vulnerable
sections of the population
Open ended protection for
specific sectors
Imposing administrative
price controls
Banning exports
Exchange rate
misalignment
Resisting
urbanization/underinvesting
in infrastructure
Ignoring environmental
implications
Poorly regulating the
Banking sector and
excessive interference
Measuring educational
progress solely by
higher enrollments and
ignoring
the quality of
education
5
7
9
10
11
12
Sources: The Growth Report Strategies for Sustained
Growth and Inclusive Development,2008
http://documents.worldbank.org/curated/en/1209
81468138262912/pdf/449860PUB0Box3101OFFICI
AL0USE0ONLY1.pdf
Post-Crisis Growth in Developing Countries A
Special Report of the Commission on Growth and
Development on the Implications of the 2008
Financial Crisis, 2010
https://openknowledge.worldbank.org/bitstream
/handle/10986/13546/52462.pdf?sequence=1&is
Allowed=y
16

Nine examples of economic catastrophes
17
How to Lose an Empire Without Really Trying: British Imperial Policy in North America
Acts of the British were maintained because of the ideology of mercantilism that was so deeply engrained in
the economic thought of policy makers who accepted business as usual, instead of being swayed by the
arguments of ant mercantilists such as David Hume.
Establish, Disestablish, Repeat: The First and Second Banks of the United States
America’s fear of centralized monetary authority caused it to reject two central banks, condemning the US
to three-quarters of a century punctuated by frequent financial crises.
The Great Hunger: Famine in Ireland, 1845-1852
Britain’s commitment to free markets, rather than to assist the starving in Ireland, led to one of the worst
humanitarian crises in history - the Irish famine.
The Krauts Will Pay: German Reparations after World War I
Although death and destruction afflict both sides in war, the vanquished typically suffer more than the
victors. German reparations after World War I were an unmitigated disaster but policymakers seem to have
learned after World War II.
Shackled with Golden Fetters: Britain’s Return to the Gold Standard 1925-1931
Britain’s reestablishment of the gold standard after WWI helped to turn what would otherwise be an
ordinary recession, into the Great Depression, the most severe economic crisis the industrial world has
known.
Trading Down: The Smoot-Hawley Tariff, 1930
A good example of a political party applying its “tried and true” recipe, relying on instincts rather than
analysis. A commitment to out of date ideology was at the heart of this blunder.
Why Didn’t Anyone Pull the Andon Cord? Japan’s Lost Decade
Poorly timed deregulation that contributed to a massive asset bubble that ultimately ensued in suffering of
both the financial and non-financial parts of the economy. Had Japan pulled on the Andon cord, the
consequences would have been far less severe.
The Worst Financial Crisis since the Great Depression: The Subprime Meltdown
The economic boom that preceded the subprime crisis was fueled by wrongheaded economic policy, in
particular fiscal and monetary expansion. Against rule-of-thumb monetary policy tightening, Greenspan
maintained expansionary monetary policy for a longer period than was advisable.
I’m OK. Euro Not OK?
The European sovereign debt crisis was the result of a poorly conceived economic policy choice made for a
distinctly ideological reason: the adoption of the euro.
Source: Grossman (2013), Wrong: Nine Economic Policy Disasters and
What We Can Learn from Them.

Proposition USA
(1979)
Austria
(1984)
France
(1984)
Germany
(1984)
Switz.
(1984)
Canada
(1988)
UK
(1989)
A minimum wage increases
unemployment among young
and unskilled workers
Agree
Disagree
80
10
64
35
38
60
69
30
66
32
85
15
76
24
A ceiling on rents reduces the
quantity and quality of housing
available
Agree
Disagree
96
2
89
11
52
44
93
6
79
20
95
5
85
14
'Consumer protection' laws
generally reduce economic
efficiency
Agree
Disagree
50
46
29
70
22
77
35
65
44
56
46
52
23
77
Tariffs and import quotas
reduce general economic
welfare
Agree
Disagree
95
3
86
13
70
27
94
6
87
10
96
4
84
15
Source: Adapted from Ricketts and Schoesmith 1990 and from the authors’ survey on MENA.
Surveys of economists opinion
18

First, an online survey using both survey monkey and Qualtrics software
was used. The questionnaire consisted of 29 questions and was sent to
all 355 ERF affiliates and a number of other economists from the Middle
East and North Africa (MENA) region.
Data collection: October 1, 2018 to November 15, 2018.
Second, to complement the quantitative datasets with further views and
opinions, we also conducted 20 semi-structured interviews with leading
economists from the region.
This study relies on a dataset that was compiled from a variety
of sources.
A survey of MENA economists (2018) and semi-structured interviews (2018-2019)
19
20
Semi-Structured
Interviews
50%
of
respondents
are ERF
affiliates

The Questionnaire on MENA Economists’ Opinion- 2018

Salient characteristics
Note: The percentages are based on those who responded to the question.
Sample Distribution by Gender
Males
70%
Females
30%
Sample Distribution by Age Group
Sample Distribution by Age-Group and Type of Employment
0
20
40
60
80
100
Non-Academic Academic
Age >=71
Age 61-70
Age 51-60
Age 41-50
Age 31-40
Age 21-30
21
Academic
66%
Other
34%
Type of Affiliation Institution

0
10
20
30
40
50
60
70
Main Reason for Studying Economics
Types of Economists
Mainly
Qualitative
18%
Mainly
Quantitative
60%
Theorist
4%
Other
18%
On becoming an economist: survey results
22

Teachers
influence
Prior
Readings
Math
background
Understanding
society
Proximity to
other
disciplines
Interest
in
politics
Coincidence
Main reason for studying economics: interview results
Country/Regional
Situation
Based on the authors’ semi-structured interviews
23

Influence of Schools of Economic thought
Belong to a
particular
school
59%
Belong to
multiplt
schools
16%
Not
belonging to
any school
25%
Influence of Schools of Economic Thought
Classical
1%
Neoclassical
3%
New Classical
5%
Keynesian
8%
Monetarist
6%
Marxist
1%
New
Keynesian
8%
Multiple
Schools
16%
Institutionalist
1%
Developmenta
list
15%
Behaviorist
4%
Post
Keynesian
3%
New
Institutionalist
4%
Don’t Belong
to Any
25%
24

Sample Distribution by Enjoying or Not Economics
Yes
94%
No
2%
Indifferent
4%
Age Distribution by whether Economists Enjoy Economics or Not
25

Country of Major Economics Institution
Egypt
25%
GCC
1%
Other Arab
7%
UK & Europe
21%
US & Canada
29%
Middle East
Non-Arab
2%
Other
Countries
15%
Age Distribution of Quantitative Economists
Age Distribution by Schools of Economic Thought
26

13 questions on economic policy
Q1. Are Price Ceilings on Goods and Services Beneficial?
Q2. Does Imposing a Minimum Wage Mean Lower Employment?
Q3. Is Monetary Policy Dominated by Fiscal Conditions?
Q4. Is Inflation Primarily a Monetary Phenomenon?
Q5. Can Unemployment be Reduced at a Higher Inflation Rate?
Q6. Are Cash Transfers More Effective Than In-Kind Subsidies?
Q7: Are Consumer Protection and Anti-Trust Laws Needed?
Q8. Does Corporate Social Responsibility Have a Critical Role to Play in Development?
Q9: Do Public Enterprises Have a Significant Economic Role in Modern Economies?
Q10: Is a Fixed Exchange Rate Regime Better than a Flexible one for the Purpose of Economic Stability and Development?
Q11: Is a Large Budget Deficit Bad for Economic Development?
Q12: Do Import Restrictions Through Tariffs and/or Quotas Have a Negative Economic Impact?
Q13: Is the Service Sector, as Opposed to the Manufacturing Sector, the Best Route to Economic Development? 27

Consumer Protection and Anti-Trust Laws are Needed for
Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Consumer Protection and Anti-Trust Laws are Needed
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
Don’tBelongtoany…
BelongtoMultiple…
It Depends
No
Yes
Q7: Are Consumer Protection and Anti-Trust Laws Needed?
28
13 questions on economic policy: Strong Agreement

Corporate Social Responsibility has a Critical Role in
Development for Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Corporate Social Responsibility has a Critical Role in Development
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q8. Does Corporate Social Responsibility Have a Critical Role to Play in
Development?
29
13 questions on economic policy: Strong Agreement

Cash Transfers are More Effective Than In-kind
Subsidies for Academic versus Non-Academic
Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Cash Transfers are More Effective Than In-kind Subsidies
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q6. Are Cash Transfers More Effective Than In-Kind Subsidies?
30
13 questions on economic policy: Moderate Agreement

Public Enterprises have a Significant Economic Role in Modern
Economies for Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Public Enterprises have a Significant Economic Role in
Modern Economies
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q9: Do Public Enterprises Have a Significant Economic Role in
Modern Economies?
31

A fixed Exchange Rate Regime is Better than a Flexible one for the
Purpose of Economic Stability and Development for Academic versus
Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
A fixed Exchange Rate Regime is Better than a Flexible one for
the Purpose of Economic Stability and Development
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q10: Is a Fixed Exchange Rate Regime Better than a Flexible one for the
Purpose of Economic Stability and Development?
32

A Large Budget Deficit is Bad for Economic Development
for Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
A Large Budget Deficit is Bad for Economic Development
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q11: Is a Large Budget Deficit Bad for Economic Development?
33

Price Ceiling on Goods and Services is Beneficial for Academic
versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Price Ceiling on Goods and Services is Beneficial
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Total
BelongtoMultiple…
It depends
No
Yes
Q1. Are Price Ceilings on Goods and Services Beneficial?
34
13 questions on economic policy: Disagreement

Minimum Wage Lowers Employment Rates for
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Minimum Wage Lowers Employment Rates
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Total
BelongtoMultiple…
It Depends
No
Yes
Q2. Does Imposing a Minimum Wage Mean Lower Employment?
35

Monetary Policy is Dominated by Fiscal Conditions for
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Monetary Policy is Dominated by Fiscal Conditions
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Total
BelongtoMultiple…
It Depends
No
Yes
Q3. Is Monetary Policy Dominated by Fiscal Conditions?
36

Inflation is Primarily a Monetary Phenomenon for Academic
versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Inflation is Primarily a Monetary Phenomenon
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q4. Is Inflation Primarily a Monetary Phenomenon?
37

Unemployment Can be Reduced at a Higher Inflation
Rate for Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Unemployment Can be Reduced at a Higher Inflation Rate
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q5. Can Unemployment be Reduced at a Higher Inflation Rate?
38

Import Restrictions through Tariffs and/or Quotas have a Negative
Economic Impact for Academic versus Non-Academic Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
Import Restrictions through Tariffs and/or Quotas have
a Negative Economic Impact
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q12: Do Import Restrictions Through Tariffs and/or
Quotas Have a Negative Economic Impact?
39
13 questions on economic policy: It Depends

The Service Sector, as Opposed to the Manufacturing Sector, is the Best
Route to Economic Development for Academic versus Non-Academic
Economists
0
10
20
30
40
50
60
70
80
90
100
It depends
No
Yes
The Service Sector, as Opposed to the Manufacturing
Sector, is the Best Route to Economic Development
0
10
20
30
40
50
60
70
80
90
100
Classical
Neoclassical
NewClassical
Keynesian
Monetarist
Marxist
NewKeynesian
Institutionalist
Developmentalist
Behaviorist
PostKeynesian
NewInstitutionalist
Other
Total
BelongtoMultiple…
It Depends
No
Yes
Q13: Is the Service Sector, as Opposed to the Manufacturing Sector,
the Best Route to Economic Development?
40
13 questions on economic policy: It Depends

Probit analysis
41
Type of
employment
(Academic vs. Non-
Academic)
ERF affiliation
Country of studiesGenderAge
1 2 3
5 6
7
Schools of
economic thought
o Belonging to one
o Belonging to
multiple
o Not belonging to
any
Country of
residence in MENA
4
Controls
Outputs
questions of economic thought and
influencing policies.
13
Results
• No particular school of economic thought seems to
shape the economists’ views.
• Gender matters.
• Studying Economics in the US and Canada seems to
significantly affect view related to monetary policy,
CSR and budget deficit.
• Academic economists seem to more likely disagree
with the role of CSR and more likely to agree that fiscal
conditions dominate the monetary policy.
• Senior economists are more likely to be involved in
policy making.
• ERF affiliates are more likely to be involved in policy
making compared to non-ERF ones.

Main Challenges Facing the Region for Growth and
Development
Ressources
20%
Demographi
c Issues
9%
Governance
34%
Macroecon
omic
manageme
nt
16%
Institutional
issues
21%
Main challenges: survey results
42

Main Challenges Facing the Region by Type of Economists
0
20
40
60
80
100
Non-Academics Academics
Institutional issues
Macroeconomic
management
Governance
Demographic issues and
population growth
Resources
Main Challenges Facing the Region by Gender
0
20
40
60
80
100
Males Females
Macroeconomic
management
Governance
population growth
Resources
Main Challenges Facing the Region by Schools of Economic Thought
0
20
40
60
80
100
Macroeconomic management
Governance
population growth
Resources
43
Main challenges: survey results

Demography
Youth Unemployment
Institutions
Growth
Natural Resources
Governance
Education
Environment
External Interferences
Lack of desire for progress
Freedom of expression
Politics
Poor Macroeconomic Policy
Water
Oil
Agriculture
Enabling private sector
Underdeveloped Financial System
Lack of understanding of economic legitimacy
Low importance of research
Adjusting to transformational economic changes
Service delivery
Informality
Modernists vs conservatives
Lack of tools
Culture
Markets
Inclusiveness
Development
Main challenges: interview results
44

Potential solutions: survey results
How Should Policymakers Deal with Economic Challenges?
Institutional
Reforms
38% Evidence-
based
approach at
the
microeconomi
c level…
Structural
reforms
16%
Fiscal and
monetary
policy
1%
Investment in
human capital
34%
Infrastructural
investment
3%
How Should Policymakers Deal with Economic
Challenges (Most Important Measure) by
Gender?
0
10
20
30
40
50
60
70
80
90
100
Males Females
Infrastructural investment
Investment in human capital
Fiscal and monetary policy
Structural reforms
Evidence-based approach at
the microeconomic level
Institutional Reforms
How Should Policymakers Deal with Economic
Challenges (Most Important Measure) for
Academic versus Non-Academic Economists?
0
10
20
30
40
50
60
70
80
90
100
Non-Academic Academic
Infrastructural investment
Investment in human capital
Fiscal and monetary policy
Structural reforms
Evidence-based approach at
the microeconomic level
Institutional Reforms
45

Potential solutions: interview results
Flexible markets
Regulation
Education
Governance
Solve political problems
Knowledge-based economy
Stable and inclusive financial system
and macroeconomic environment
Invest in human capital
Institutions
Monitoring and evaluations
Expectations within policy sphere
Demography
Increase productivity factor
System distribution
Fiscal policy adjustment
Economic model that generates jobs
Efficiency in resource allocation
Diversification
Invest in infrastructure
Reduce public sector employment
Countercyclical fiscal policy
Beneficial migration channels
Financial sector reforms
New thinking on informality
Mobilizing good economists
Desire to change
Incentives to raise government savings
Priority to agriculture and manufacturing
Reducing budget deficit
Deadlines
NGO contribution
Promote democracy
Long-term development strategy
46

Proposition USA
(1979)
Austria
(1984)
France
(1984)
Germany
(1984)
Switz.
(1984)
Canada
(1988)
UK
(1989)
MENA
(2018)
A minimum wage increases
unemployment among young and
unskilled workers
Agree
Disagree
It depends
80
10
64
35
38
60
69
30
66
32
85
15
76
24
30
40
29
A ceiling on rents reduces the
quantity and quality of housing
available
Agree
Disagree
It depends
96
2
89
11
52
44
93
6
79
20
95
5
85
14
46
17
38
'Consumer protection' laws
generally reduce economic
efficiency
Agree
Disagree
It depends
50
46
29
70
22
77
35
65
44
56
46
52
23
77
89
5
6
Tariffs and import quotas reduce
general economic welfare
Agree
Disagree
It depends
95
3
86
13
70
27
94
6
87
10
96
4
84
15
34
19
47
Wage-price controls should be
used to control inflation
Agree
Disagree
It depends
28
71
47
52
54
43
7
92
39
61
26
73
39
60
42
43
15
Source: Adapted from Ricketts and Schoesmith 1990 and from the authors’ survey on MENA.
International comparisons of economic opinion
47

“If economists could manage to get themselves thought of as
humble competent people on a level with dentists, that
would be splendid”.
Keynes (1931)
“In spite of my profound disagreement with the
authoritarian political system of Chile, I do not consider it
as evil for an economist to render technical economic
advice to the Chilean Government, any more than I would
regard it as evil for a physician to give technical advice to
the Chilean Government to help end a medical plague”.
Friedman (1976)
Dentists, scientists, carpenters, engineers or social scientists
48
“The economist- plumber stands on the shoulder of scientists and
engineers, but does not have the safety net of a bounded set of
assumptions. She is more concerned about “how” to do things than
about “what” to do. In the pursuit of good implementation of
public policy, she is willing to tinker. Field experimentation is her
tool of choice.”
Duflo (2017)
Economists have lately been called upon not only to analyze
markets, but to design them. Market design involves a
responsibility for detail, a need to deal with all of a mar-
ket's complications, not just its principle features. Designers
therefore cannot work only with the simple conceptual
models used for theoretical insights into the general
working of markets. Instead, market design calls for an
engineering approach.
Roth (2002)
the field has evolved through the efforts of two types of
macroeconomist— those who understand the field as a type of
engineering and those who would like it to be more of a science.
While the early macroeconomists were engineers trying to solve
practical problems, macroeconomists have more recently focused
on developing analytic tools and establishing theoretical principles.
These tools and principles, however, have been slow to find their
way into applications. As the field of macroeconomics has evolved,
one recurrent theme is the interaction—sometimes productive and
sometimes not— between the scientists and the engineers.
Mankiw (2006)

Recommendations
Recommendations
2
1
5
3
Interdisciplinary economic
education is needed: More
liberal arts education. Do
more meta-evaluations.
Acknowledge the
interconnectedness of
methods.
Importance of big data
and AI*
49*MIT announces $1bn artificial intelligence and computing initiative
https://www.ft.com/content/06d44278-d07d-11e8-a9f2-7574db66bcd5
Policy and Real
World Orientation:
Economics and
economists would
benefit from
incorporating social,
economic and ethical
perspectives into
their policies.
Follow the six rules of Alfred
Marshall’s rules on the use of
mathematics in economic
analysis: “To inform not to
impress” 1. use math as a
shorthand rather than an
engine of inquiry. 2. keep to
them till you have done. 3.
translate into English. 4.
illustrate by examples that are
important in real life. 5. burn
in mathematics. 6. if you can’t
succeed in 4 burn 3.

Rodrik’s 20 commandments
Ten commandments for non-economists
1. Economics is a collection of models with no predetermined
conclusions; do not let anyone tell you otherwise.
2. Do not criticize an economist’s model because of its assumptions; ask
how the results would be changed if the assumptions that seem
problematic were more realistic.
3. Analysis requires simplicity; beware of incoherence that passes itself
off as complexity.
4. Do not be put off by the math; remember economists use math not
because they are smart, but because they are not smart enough.
5. When an economist makes a recommendation, ask what makes
him/her sure the underlying model applies to the case at hand.
6. When an economists uses the term “economic welfare,” ask what s/he
means by it.
7. Do not assume what an economist says in public is the same as what
he says in the seminar room.
8. Economists don’t (all) worship markets; if they seem like they do, it’s
probably because they know better how they work than you do.
9. If you think all economists think alike, do attend one of their seminars.
10. If you think economists are especially rude to non-economists, do
attend one of their seminars.
Ten commandments for economists
1. Economics is a collection of models; cherish the diversity.
2. Remember: it’s a model, not the model.
3. Make your model simple enough to isolate how specific causes work, but not
so simple as to leave out key interactions among causes.
4. Unrealistic assumptions are OK; unrealistic critical assumptions are not OK.
5. The world is (almost) always second-best; ignore it at your peril.
6. Mapping models to real-world settings requires explicit empirical diagnostics,
which is more craft than science.
7. Do not confuse agreement among economists for certainty about how the
world works.
8. It’s OK to say “I don't know” or express range of views when asked about the
economy or policy
9. Do not forget that efficiency is not everything.
10. Do not abuse your expertise by substituting your values for the public’s.
Source: Rodrik (2015), Economics rules: The rights and wrongs of the dismal science
50

Concluding remarks
Many responses from our
MENA sample are those
influenced by multiple
economic schools of
thought, with
consideration for specific
contexts and shaped by
international education
01
Those who influence policy
are more likely to be older
and non-academics
Economics is increasingly
influenced by data and the
evolution of technology
02 03 04
Vested interest
influences public policy

Q1: Are the 12 ‘bad ideas’ stated in the growth report really bad?
Yes
No
It depends
Q2: The economist and the ‘prince’” should economists operate/behave like
1. Scientists
2. Engineers
3. Carpenters
4. Dentists/physicians
5. Social scientists
6. …?
Q3: In your opinion, the economists’ role in formulating public policy in the ERF/
MENA region is significant
Yes
No
It depends
3 Questions

The authors are very grateful to the following distinguished economists and scholars for
their acceptance to be interviewed as part of this study: Gouda Abdel-Khalek, Raja
Almarzoqi Albqami, Hassan Aly, Rabah Arezki, Rym Ayadi, Sami Ben Naceur, Adel Beshai,
Shanta Devarajan, Ibrahim El Badawi, Hazem El Beblawi, Ibrahim El Eissawy, Alia El
Mahdi, Hadi Esfahani, Ahmed Galal, Ayhan Kose, Hanan Morsy, Mustapha Nabli, Nasser
Saidi, Ismail Serageldine and Shakour Shaalan. The usual disclaimers apply. The authors
also acknowledge the Economic Research Forum and the Middle East Economic
Association for the support they provided in diffusing the online questionnaire. Special
thanks to Mariam Hoda El Maghrabi for excellent research assistance.
Acknowledgments
53

Megatrends
Shifts in the global
economy
Climate Change
Urbanization
Demographic
Transitions
Renewed debate
about globalization
Technological changes
Fragility
and violence
Market volatility
and commodity cycles
Opportunities
and
Challenges
Source: Forward Look 2016 55

On Ideas and Economic Policy: A Survey of MENA Economists

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