In light of the recent terror attacks in Tunis and Sousse, which have debilitated the tourism industry and sent investors scurrying to reconsider their options and assets in the country, it is more important than ever to look at the intersection between economic growth and transparent democratic institutions in Tunisia.
President Obama and Tunisian President Béji Caïd Essebsi, meeting during Essebsi’s May visit to the United States, published this article about consolidating democratic gains in Tunisia and spurring responsible economic growth. The discourse would benefit from a deeper understanding of the legal and regulatory issues that stifle job growth in that country.
The bread and butter of job growth is small and medium business, but in Tunisia operating such a business is prohibitively complex and expensive. Mohammed Bouazizi wasn’t protesting the “humiliations of an oppressive government;” he was an entrepreneur who had exhausted every method, legal and extralegal, of earning a living. Bouazizi was stripped of the right to a livelihood by cumbersome barriers to doing business and the absence of property rights. His frustration represents a major cause of economic stagnation – a regulatory environment that stifles job creation and smothers human capital.
Regulations on businesses are supposed to support the public good, for example by protecting workers, the environment, and economic stability. Under the previous Tunisian regime — as in many countries around the world — that system was twisted into a tool for keeping everyone but politically-connected crony capitalists locked out of economic opportunity. Despite a revolution and years of difficult political reforms, much of that old legal and regulatory structure remains intact, still suffocating entrepreneurs and small businesses.
In their opinion article, the presidents call for more foreign direct investment. But the resources required to develop a thriving economy already exist inside the country. Highly educated, decidedly entrepreneurial, and possessing capital of their own, Tunisians don’t need Chinese industry or American venture capitalists: they need a regulatory framework that encourages rather than stymies business.
A thriving private sector is not just a vehicle to economic growth. The same legal institutions that enable a Tunisian to register her property will protect her from exploitation. The same principles that facilitate entrepreneurship will empower future leaders. Two of the Tunisian government’s most pressing goals are consolidating democratic gains and reducing poverty. By enacting institutional reform that encourages the growth of the private sector, Tunisia can achieve both.
Sarah Ali is a Program Assistant for the Middle East & North Africa at CIPE.
