Youth Unemployment: The case of the GCC - Dr Majid Taghavi

In the Middle East and North Africa, there has been an unprecedented growth in the youth population over the past twenty years. The forecasts also suggest that the trend is to be continued for years ahead. Youth unemployment rates in the MENA and particularly in the GCC have also been rising alarmingly, leading political economists to search for workable solutions. The main problem with most political economists is that they tend to attach much greater weight to the role of government spending and supply-side policies in overcoming youth unemployment over the medium and longer terms. In an attempt to help arrive at practical and workable recommendations, this talk will depart from the conventional wisdom and look at an alternative school of thought. The institutional economics framework is highlighted where the role of the government is one of providing a set of legal and regulatory measures in creating a safe haven for the growth and development of private sector; hence attracting foreign investment, know-how and technology. The main focus of the talk is on the effect of private investment – domestic and foreign - on youth unemployment in the GCC over the period 1990-2020. The panel data estimation that I have used shows that higher investment can lower youth unemployment rate, but only in two countries out of the six. However, and more interestingly, our findings demonstrate that this constructive effect of investment on youth unemployment is significantly weaker in oil rent dependent economies, such as Saudi Arabia and Kuwait. Moreover, the higher level of oil dependency could dampen the effects of investment on youth unemployment. The results thus, highlight the importance of quality of investment in productive parts of economy, which is largely absent in most MENA countries and tends to pose a persistently fundamental problem in resource (oil) rich countries. 

Dr. Majid Taghavi has previously taught at Cork University (Ireland), Middlesex University (London), and at Newcastle University. Now retired, he worked as a higher education consultant in Tripoli, Libya, between 2011 and 2013. His current research focuses on the Economics of Terrorism, Macroeconomics of Remittance Outflows (GCC), Public Choice and Corruption, the Political Economy of Youth Unemployment (MENA and GCC), and the Economics of Higher Education (Libya and Egypt).