Investment challenge after the revolution

After the revolution, Tunisian economy has been facing many problems and challenges 

especially with the worldwide economic crisis. Foreign Investment was the major affected sector due to security instability, manifestations, and strikes. In fact, during the first term in 2011; direct foreign investment has decreased with 28.8% according to FIPA (the Foreign Investment Promotion Agency).A new strategy to encourage foreigners to invest in Tunisia was deeply needed such as promotion of a good image of our country, more facilities by the government, and an encouraging infrastructure. Indeed, according to FIPA, during the first term of 2013 foreign direct investment reached more than 393.7 million dinars whereas they only reached 338.6 million dinars during the same period in 2011.However, the economic situation is still running risks and observers are worried about it .In fact, Mr. Chedhly Ayari, the governor of the central bank ofTunisia,  in an interview held with “al chark al -awssat newspaper”  ,said that “economic situation would be disastrous at the end of the current year after the inflation rate reached 6%, for the first time since 1970. A policy of austerity is needed to enable the country to overcome the economic problem”. Furthermore, the current political crisis and after the terrorism matter has been intensified, investors do not want to take high risks as a result they avoid working in Tunisia, therefore the political elite should take in consideration the economic issue and make it its number one priority so that the choice of a democratic path can effectively seduce and reassures investors to invade the Tunisian market consequently strengthen the integration of Tunisia in global economy. 

                                                                                                       Ines Agrebi

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China: The appetite of the dragon

Over the last few years China has raised itself between the most powerful and influent countries in the world, that’s thank to their political decisions to open up this communist country to the world. China has known one of the biggest economic growths over the last years (10% of growth)

China has become a very attractive country for worldwide companies.Its development is based on exportation.

Indeed it has built its economic development thanks to its large and cheap labor. China is a country that attracts a lot of companies that delocalized there in order to increase their benefits and to win the huge Chinese market. The Chinese population is up to 1 350 000 000 habitants which means 1 350 000 000 potential buyers.

Besides, the Chinese Market is a relatively new market, in 1970 the Chinese government decided to start a socialist market economy after the death of Mao Zedong in 1976,the government led by Deng Xiaoping decided to open the Chinese market to foreign investments because that would decrease the unemployment ratefrom…….% to 6.5% and that would modernize the Chinese economy while keeping its political regime.

Since 1987,with the industrial boom, China, nicknamed the workshop of the world,hastaken a major role in the industry of textile, iron, electronic andlow quality objects keeping a very low price.

China is really integrated in the international scene, it is member in all the international financial organisms, IMF in 1980, World Bank in 1981, and APEC in 1993 and finally it is part of the World Trade organization in 2001.

The communist ideology doesn’t exist anymore in China; there is a growing idea of the liberal economy in an authoritarian regime with a unique political party.

The Olympic Games in 2008 whichtook place in Beijing comforts China’s position in the international scene

The economists agree to say that China is going to becomethe first economic power in 4 years.

But how long will China stay the first economic power in the world?

Well not that long .First of all because of the political decision made by the Chinese government of the unique born. The strength of China is its young, active and hard working population. This decision will decrease the number of labor and China needs its labor in order to maintain the growth of the economy.

Besides,this decision made by the government to reduce the number of newborns will lead to an aging of the population and that could lead to a problem of financing the retirements.

Moreover, china has a problem in the repartition of its wealth( 15.5% of the Chinese population live  under the threshold of poverty ), the Chinese littoralconcentrating the majority of the population and the majority of the activities whereas the inside stays underdeveloped.

China has also to ameliorate its relations with Japan and South Korea if this country wants to have a major role in the international scene. South Korea is the country that trades most with China(17.1% of Chinese exportations go to South Korea and 9.3% of Chinese importations come for South Korea) but by supporting the North Korean regime the Chinese government is threatening to deteriorate its relations with South Korea.

Besides, China is in conflict with Japan about the Senkaku Islands that both claim as part of their territory. This conflict has already cost to the Chinese government more than b$ 500, and the Japanese companies fled China because very recently a big wave of violent strikes was led against the Japanese companies in China.

Japan is the biggest supplier of China, 11.2% of Chinese importations come from Japan and 7.8% of Chinese exportations go to Japan.

China may have already lost a huge economical partner and it may have even lost its influence in the south eastern Asian countries

Moreover in the future, China will also have to face the competition against India that will become second economic power behind the USA in four years.

China has a lot of advantages that comforts this country as one of the most powerful countries around the world. China is a country that developed itself very quickly and raised itself as a major figure in the international scene. But it has also a lot of improvements especially in the foreign relations field to do in order to maintain its position in the podium of the most powerful and influential countries around the world.

                                                                                Mourad Khaled

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Gulf states possess a wealth of investment opportunities

The high oil prices in 2011 and 2012 had a significant positive impact on the oil producing countries, particularly those in the Gulf region, where these countries have achieved budget surpluses in their budgets close to $ 186 billion.

From this point, the oil-producing countries in the Gulf should benefit financial surpluses achieved during the last three years in the diversification of income sources and investments in projects to support the process of economic development. They are able to bring more foreign investment in supporting infrastructure projects that contribute to perform more the labor and increase the gross domestic product.

These countries can benefit from the case of a slowdown in the global economy and its transformation into an investment opportunity. The UK energy sector, for example, has been suffering for months with rising costs, which prompted the British government to seek alternative sources of energy. This can be a great opportunity for the Gulf countries, which invest in other benefits of energy in the long term to avoid the risk of a decline in world prices of energy.

And following the rise in oil prices, the Gulf countries benefit more funds to invest abroad more than what can be spent on the acquisition of businesses and investments, and thus began a portion of funds Gulf liquid to flow to emerging markets. Their investment fund is particularly active in recent years. They invest around the world and particularly in France.

 Flows of foreign direct investment increased from Arab countries, mainly the Gulf from 24% to 24.6 billion dollars last year.

Many motivations behind these investment flows of Gulf in emerging markets: is that business growth of GCC exceeds the capacity of their local markets. So it has to go outside so it can continue to grow. Qatar, for example, has 20 banks.

In addition, several Gulf companies believes that the skills and backgrounds confer a competitive advantage by capturing some of the opportunities in emerging markets.

So,  foreign direct investment knows importance following its ability to contribute to the resolution of national economic challenges such as infrastructure development and promote competition in the local market and find new jobs for citizens and the development of legislation.

Rawdha Dridi

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Young Spaniards facing unemployment

A country deep in recession since 2008, Spain has been facing major deficiencies in its labor market.  Youth unemployment has been a persistent phenomenon that has worsened during the last crisis. According to a report by Spain’s National Statistics Institute, more than double the European Union average of the population is jobless.

 In 2012, the national unemployment rate reached 22.85%, the highest rate in nearly 17 years and the current highest in the industrialized world. Spain’s National Statistics Institute reports that the unemployment rate in Spain increased to 25.02% in the third quarter of 2012 from 24.63% in the second quarter of 2012; this explains the rapid deficit in the government control over its labor market. Looking back at the country’s history, we notice that from 1987 until 2012, Spain's unemployment rate averaged 16.6% reaching an all-time high of 25.0% in September of 2012 and a record low of 8.0% in June of 2007.  Emphasizing the deep crisis the country is currently living.

As the government undergoes the biggest slash in public spending in recent times, it is to blame for the relatively high unemployment rate. The numerous deficiencies in the government’s policies not only resulted in the increase of the number of the unemployed (5.2 million by the end of 2012) but also the decrease in the number of job seekers which is viewed as one additional undesired effect to add to the already fragile economy.

The population’s work conditions and specifically those of the young people depend harshly on the efficiency of the country's educational system. The transition from the education environment to the work environment is, therefore, strongly conditioned by the employment situation and the job matching equality. The youngsters-those aged between 19 and 25 years old-find themselves facing a decision of whether or not to continue going to school. When it comes to leaving school early, Spain stands out with its high percentage (30.6%) of people aged between 18 and 24 not completing their elementary school and not having any kind of training. That does not only accentuate the hard entry to the work market but also puts the future of the youngsters in jeopardy especially that most companies are becoming highly demanding when it comes to work qualifications and requirements. In other words, the likelihood of a young person getting a stable and well remunerated job depends on the quality and quantity of the education they received.

This tends to have a negative effect on the percentage of young people entering the labor market and, thereby, explains the unbalanced job matching equality. That triggers off the threat of a brain drain and as Ignacio Escolar, author of the country’s most popular political blog and former editor of the newspaper Publico mentioned “This is the least hopeful and best educated generation in Spain, and it's like a national defeat that they have to travel abroad to find work”.

Polarization, education imbalance and the deficient segmentation of the job market play major roles in building up to the ever rising unemployment rate in the country. The last reform the government made to increase the number of trainings offered was mainly focused on university education. This polarization did not only lead to imbalances between the job demand and supply at different education levels but also resulted in high levels of unemployment among graduates.

The limited effectiveness of the active labor market is reflected through the active labor market policies (ALMP), which aim at boosting labor force participation along with reducing structural unemployment.  These policies failed at accomplishing the goal as they were only minor attempts to minimize the unemployment rate and ease the transition process to new jobs.

It is for all the reasons stated above that the Spanish government must mobilize its resources towards examining and fighting those issues, in order to avoid a longer recession.

For that purpose, it is necessary that the government reconsiders its policies. A good first step would be to maintain a good educational system. This could be achieved by surveying and supporting the students who are at risk which will reduce the rate of early dropouts. This measure will also improve the quantity and quality of education of the young Spaniards, paving the way for them to successfully enter the job market.

Considering the already weak economy, the government is facing a historical challenge; will it be able to bring the country out of the harsh recession and back on its feet? It seems that both the government’s position and the fate of the young Spaniards depend on it.

                                                                                                           Sarah Briki

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