Enforcing the rule of law and regulatory environment as prerequisite to protect property rights and...

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Dr. Kamal Field Al-BasriDirector of Research

Mr. Mudher SebahiSenior Research Fellow

21 July 2014

Iraq Paradox:

Wining Democracy & Losing Rule of Law

Economic Freedom of the Arab World Conference, Amman, November 18-19, 2014

Enforcing the rule of law and regulatory environment as prerequisite to protect property rights and equality –

Success stories and challenges (country reports)

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Why are some courtiers enjoy prosperity and others not?

Does natural resource is an important factor for

prosperity?

Does democracy is an important factors for prosperity?

Does economic freedom is important factors for

prosperity?

I will attempt to answer these questions with reference to

IRAQ

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United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Democracy Index 2011 -

Overall score

Economist Intelligence Unit

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United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Democracy Index 2011 -

Political participation

Overall score

Economist Intelligence Unit

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United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Democracy Index 2011 -

Electoral process andpluralism

Political participation

Overall score

Economist Intelligence Unit

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12

United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Decompostions of Political Index 2011 - Economist Intelligence Unit Electoral process andpluralism

Political participation

Political culture

Civil liberties

Overall score

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United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Functioning of government

Political participation

Overall score

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Why Government Function is weak?

21 July 2014

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Iraq Iran Algeria Egypt Saudia Jordan Turkey

Rule of Law

Control ofCorruption

Status of Rule of Law

21 July 2014

Absence of political stability

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Status of Rule of Law

21 July 2014

Rule of Law provides the necessary condition that allows transactions

/economic activities to take place in an consistent way and in which

economic agents are reassured that their rights are protected and enforced

by the law (without an unexpected complications or additional cost).

In others words Enforcing the rule of law and regulatory environment as

prerequisite to protect property rights and equality.

International evidences show:

A) FDI is essential for growth and development is highly correlated with RL.

B) Economic Reform in transition countries can not be place successfully

without RL.

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Rigidity of Business Regulations

World Bank: Doing Business 2012

21 July 2014

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Iraq Iran Algeria Egypt Saudia Jordan Turkey

GovrermentEffectiveness

Regulatory Quality

Regulations & Government Effectiveness

21 July 2014

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Enforcing Rule of Law (diagram)

21 July 2014

الدينةالمؤسسة او الثقافية

منظمات المجتمع

المدني ودورها العامة

الدولة

ودورها في

اصدار

القوانين

وتوفير

الخدمات

العامة

بيئة

داعمة

للنشاط

االقتصادي

م تنمية القي

االنسانية العليا

سيادة القانون والحكم الرشيد

رفع

مؤشرات

التنمية

البشرية

التعريف

بالقوانين

واثارها

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Impact of Absence Rule Law on the Economy

1. On Private sector development

2. On Public Sector Performance

3. On FDI

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Share of Private Sector in GDP

21 July 2014

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Execution of Federal Investment Budget

21 July 2014

SpendAllocated

Billion I D

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FDI

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Gro

ss

In

ve

stm

en

t p

er

Ca

pit

a

(co

ns

tan

t 2

00

0 U

S$

), 2

00

3

Bottom

Quintile

Fourth

Quintile

Third

Quintile

Second

Quintile

Top Quintile

Least Free ……………..….. Most FreeMichael Walker 2005

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How important is Rule of Law?

Per Cap Income and Economic Freedom

y = 2429.1x2 - 23059x + 56370

R2 = 0.5665

0

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0 2 4 6 8 10

Per capita Income and the Rule of Law

y = 466.29e0.4656x

R2 = 0.6042

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0 2 4 6 8 10

Michael Walker 2005

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Value of Shares

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Rule of LawRefo

rmin

g R

egula

tions

Abse

nce

of

Soci

alC

ohesi

on

Optimism

Missed opportunity

Disappointment

Despair

Absence of Rule of Law

The Four Scenarios

21 July 2014

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Rule of Law: Minority protected

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No one should be Above the Law

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No one is allowed to Abuse Others