A decade following the international financial meltdown and local politics upheavals, many of the non-oil exporting countries in the entire East and North Africa are undergoing an activity of redefinition of how these are associated with the global economy. It is not heading well. Egypt, Tunisia, Morocco, and Jordan have become more dependent on exterior borrowing than on foreign direct investments compared to the pre-2008 period.
This is noticeable with declining ratios of FDIs to GDP, on the other hand with increasing ratios of international debts to GDP and total exports. Growth through personal debt rather than investment will have a long-term negative and sustainable impact on the capability of these nations to develop their economies. They will have trouble servicing their external obligations and can likely miss opportunities for getting badly needed international investments for development and employment generation.
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Foreign debt witnessed an unmistakable step in every four countries. The ratio of external debts to total exports of goods, services, and principal earnings was more dramatic for all four countries even. That is a proxy of the capacity of these economies to service their growing external obligations. Despite the fact that the overall degrees of foreign indebtedness aren’t yet as high as the past due 1980s and early 1990s, the pace at which exterior borrowing has been climbing is alarming.
The 2008 worldwide financial meltdown and a contraction in global trade took a heavy toll on FDI in these economies. This was followed a couple of years later with the Arab Spring popular uprisings that unleashed longer-term dynamics of civil war, condition mass and collapse inhabitants displacement. Egypt and Tunisia were directly affected by the uprisings even though neither witnessed state collapse or protracted civil strife. Morocco and Jordan were more stable internally-Morocco even managed to initially benefit from the turmoil in Tunisia and Egypt and attract more foreign investors fleeing uncertainty in both neighboring countries.
However, Jordan and Morocco were not immune system to the broader regional and global contexts. Regarding Morocco, the international financial slowdown and the recession in the Eurozone exacerbated lots of the country’s structural financial and financial weaknesses. The Jordanian economy was a strike by the collapse of essential oil prices-in the existence of strong center links to the oil-rich Arab states-and the security and political hazards linked with the civil wars in Syria and Iraq. The comparative political stabilization in every four countries as of 2014/2015 did not permit them much room for a full-fledged recovery due to the global economic slowdown.
This made it harder for all of them to attain export-led development and get FDI, leaving them with foreign borrowing as the only viable option. Foreign debts accounts for a lot of the apparent recovery, as expressed in growth rates. How to fix this? In today’s global climate, it may be much to depend on expanding exports or more FDI too. International capital markets are unstable and global trade is contracting.