The World’s Next Big Growth Challenge

The World’s Next Big Growth Challenge

The economic performance of lower-income developing countries will be crucial to reducing poverty further. Although these economies face significant headwinds, they could also seize important new growth opportunities – especially with the help of digital platforms.

Here is The World’s Next Big Growth Challenge by Michael Spence published on Project Syndicate on May 1, 2019.

MILAN – The global economy is undergoing very large structural shifts, driven by three megatrends. One is the digital transformation of the foundations on which economies are built and run. Another is the growing purchasing power and economic strength of emerging economies, and China in particular. Lastly, there are broad-based political-economy trends, which include rising nationalism, various forms of populism, political and social polarization, and a possible breakdown of the multilateral framework within which the global economy has functioned since World War II.

The media devote most of their attention to the economic, social, and regulatory challenges arising from these megatrends, and to the trade, investment, and technology tensions between China and the United States. Yet a significant share of the world’s population lives in poor countries, or in poorer parts of developing countries. Furthermore, the rapid reduction in global poverty over the past three decades is primarily the result of sustained growth in developing economies.

The future growth prospects of today’s early-stage (that is, lower income – some growing and others not) developing countries will be of huge importance in reducing poverty further. Although these countries face significant headwinds, they could also seize important new growth opportunities – especially with the help of digital platforms.

The headwinds are certainly considerable. For starters, advances in digital technologies – robotics, machine learning, sensors, and vision – directly threaten the labor-intensive manufacturing and assembly upon which lower-income, non-resource-rich economies have traditionally relied.

Moreover, climate change has had its greatest economic impact in the tropical and subtropical regions where most lower-income countries are located. The effects of global warming are highly disruptive in fragile economies, and, taken together, constitute a major new obstacle to growth.1

Fertility rates, meanwhile, remain astonishingly high in some countries, especially in Sub-Saharan Africa. In a few of the poorest – Niger, Mali, and the Democratic Republic of Congo – the rate is 6-7 children per female. The resulting flood of new entrants to the labor market is far outstripping the number of jobs available.

No known growth model can accommodate or keep up with this kind of demographic surge. Even sustained economic growth of around 7% per year won’t be enough. And although fertility tends to decline as incomes rise, that does not happen immediately. Empowering women, therefore, may be the most effective way of starting to address the challenge.

Conflict also disrupts growth. Although many conflicts appear to have a religious or ethnic basis, some scholars believe that their root cause may be economic, with ethnic divisions serving as a way to exclude other groups from access to scarce resources and opportunities. Whatever its source, inequality of opportunity has a highly disruptive effect on governance and hence growth.

But these obstacles are not insurmountable. For one thing, developing countries now have huge potential export markets in middle-income countries, and no longer depend entirely on advanced economies for access to global markets.

There is also a renewed awareness of the importance of infrastructure in enabling growth. In addition to roads, railways, and ports, electricity and digital connectivity are crucial. In this regard, the rapid expansion of cellular wireless technology, combined with the installation of high-capacity undersea broadband pipes around Africa, represents major progress. Meanwhile, China’s “Belt and Road Initiative” – though criticized by much of the West, and the United States in particular – could bring dramatic improvements in physical and digital connectivity to Central Asia and parts of Africa.

Further advances in critical infrastructure will create important growth opportunities for developing countries via e-commerce, mobile payments, and related financial services. The experience of China strongly suggests that these digital platforms, and the ecosystems that develop around them, are powerful engines for incremental, highly inclusive growth.

China, of course, is a very large, homogenous market. If smaller, lower-income developing countries are to benefit from equally rapid inclusive growth, the digital platforms will have to be regional and international in scope.

Some are starting to emerge. Jumia, a Nigeria-based e-commerce platform covering 14 African countries, recently went public on the New York Stock Exchange, amid considerable excitement. True, the company faces similar obstacles to those that Asian and Latin American platforms previously had to overcome, including a lack of reliable payment systems, low trust between buyers and sellers, and logistics and delivery bottlenecks. But the experience of other regions shows that these shortcomings can be addressed over time.

The bigger risk to these platforms stems from the inevitable and necessary increase in regulation of the Internet around the world. In particular, diverse national regulatory regimes may inadvertently or deliberately disrupt or block the international development of e-commerce ecosystems, hurting lower-income countries in the process. Avoiding the creation of such unintended obstacles should therefore be a high priority for the international community.

Today’s lower-income countries already face a tough task in trying to emulate the impressive growth of developing economies before them. An underperforming global economy, and rising national and international tensions, will make that task even harder. If the world is serious about reducing poverty further, it must pay far more attention to their progress.

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

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How to fund the growth of the region’s entrepreneurs

How to fund the growth of the region’s entrepreneurs

“Developing an angel investor pool in the Middle East will create more opportunities and will strengthen regional economic growth” said Ramesh Jagannathan, Managing Director of startAD when introducing his article for Arabian Business weekly dated March 16, 2019.

Here is his opinion.

How to fund the growth of the region’s entrepreneurs

Financing the angel investment market in Africa, Asia, Europe and America is estimated to be worth $50bn
We live in an exciting age for entrepreneurs. Fuelled by governments in the Middle East, the desire of transforming to an entrepreneurial based economy and boosting investment into building a healthy start-up ecosystem is high-up on the agenda. While there are sufficient funds to fuel potential start-ups in the ecosystem, the risk averse nature of venture capital (VC) firms mean they tend to concentrate their investments in later stage start-ups with crisper valuations. In a mature ecosystem, less than 1 percent of start-ups receive VC funding, and in emerging markets, this number drops by a factor of two. As VC investments continue to move towards more mature start-ups, there is a widening void of funding for early stage start-ups. The effect is not as severe in mature ecosystems as in an emerging ecosystem for a number of reasons.
Angel investors have traditionally filled this void. For example, in the US, annual angel investments of $24bn are being made in over 64,000 start-ups. In fact, 74 percent of all Silicon Valley investments are from entrepreneurial angels, who were previously a founder or a CEO of their own start-up. The phenomenon of “founders funding founders” highlights the organic nature of the process, that they are “local” and have a deep understanding of the entrepreneurship ecosystem and play a vital role in building the ecosystem. This deep knowledge helps to mitigate some of the risks that come with ambiguous valuation of early stage start-ups. More than 60 percent of the angels become active mentors of the start-ups they have invested in and generally take a board seat. More than half of them have a technology background.
By 2030, 88 percent of the next billion people joining the middle class will primarily come from India and China
Having the “right” angel investor tends to de-risk the entrepreneurial process and increases the start-ups’ success rate in raising funds in future rounds. Angels generally see 11 percent of their portfolio producing positive returns.
On the other hand, in emerging ecosystems, there is a dearth of previously successful entrepreneurs, thereby creating a “catch 22” situation. The time scale of the process to build a sustainable entrepreneurial ecosystem is made more acute by the fact that 67 percent of start-ups fail at some point in the process due to inability to raise a subsequent round of financing. The paradox is this: to have a healthy, sustainable entrepreneurial ecosystem, one needs a significant pool of high quality start-ups to cater to a large consumer middle-class and angel investors who have been successful entrepreneurs, preferably within the ecosystem. In other words, while having significant individual or group (eg syndicates) wealth is necessary, they are definitely not sufficient to build a robust ecosystem in an emerging economy, if the wealth is not “hard-wired” to local entrepreneurial experience. Ecosystems are organic in nature.
In India and China, this enigma has been resolved. While the pool of technology talent in these two countries has always been immense, due to the absence of middle-class, post WWII saw a significant “brain drain” from India and China to the US and Silicon Valley. The exodus of the “cream of the crop” from India, especially from the Indian Institutes of Technology (IITs), was unstoppable after the 1970s and from China since 1979, when the Chinese government started to send its best and brightest students and scholars to the US to catch up with western science and technology. By 1990, about 33 percent of all scientists and engineers in Silicon Valley were from India and China. Of these. 71 percent of these Chinese and 87 percent of these Indians arrived after 1970.
Going forward, by 2030, 88 percent of the next billion people joining the middle class will primarily come from India and China. We are now seeing a significant reverse “brain drain” of Indians and Chinese engineers, scientists and investors back to their homelands. About 80 percent of those returning hold graduate degrees in science, technology or business. China now boasts a sound angel investment culture, and while it’s still in its early stages in India it is gaining steam rapidly as the VC infrastructure is getting foundationally strong.
Turning our focus now to the UAE, and the GCC countries, the opportunity to “ride the wave” of India and China’s global tech dominance is crystal clear. But there are still gulfs to cross, such as the absence of a large, local technology talent pool. Without a disciplined and informed state-of-the-art process that dovetails to a VC infrastructure – by leveraging the local societal sensibilities and strategic inter-governmental alliances – the strength of access to large sums of local capital could quickly become our Achilles’ heel.
By all the ingredients for a master recipe to create a dominant UAE digital economy are in place and we need to diligently prepare, suit up and ride the long wave
Peter Thiel, co-founder of PayPal, discussed the role of governments in stimulating entrepreneurial ecosystems and compares the strengths of funding (supply side) versus founding based (demand) policies. Thiele recommended supply side policies as a mechanism to catalyse growth. However, in emerging economies, we could describe it as a “many body problem”.
We need to stimulate the process of accelerating the flow of global start-up talent into the ecosystem through the UAE.
Besides the government, this process should embed the local competency private sector stakeholders, such as in aviation, energy, transportation and logistics and finance industries. The Venture Launchpad programme at startAD is a classic example that shows significant promise.
Simultaneously, we should educate the regional angel investors about the mechanics and rigors of angel investment in digital start-ups and democratise access. The annual Angel Rising Symposium, now in its fifth year, brings the best minds from around the globe to discuss the best practises that are regionally relevant. The third piece of the puzzle is about building local capacity. StartAD and Khalifa Fund are partnering together to build the acceleration ramp to the global digital economic highway through programmes such as Ibtikari and Pitch@Palace.
All the ingredients for a master recipe to create a dominant UAE digital economy are in place and we need to diligently prepare, suit up and ride the long wave, leading the MENA region.

More Middle East billionaires during 2018-2023

More Middle East billionaires during 2018-2023

11 per cent growth will be seen in Middle East billionaires during 2018-2023.

Why the number of millionaires is set to rise in UAE

By Waheed Abbas / Dubai

March 7, 2019

The number of millionaires in Dubai and Abu Dhabi will increase from 440 last year to 511 in 2023 and from 192 to 223, respectively.

The number of millionaires in the UAE increased last year and this trend will continue over the next five years as growing investment opportunities will generate more millionaires locally as well as political and economic stability will also woo rich individuals and families from foreign countries, say researchers and analysts.

According to the latest report released by global consultancy Knight Frank, the number of millionaires, or high net worth individuals, in the UAE expanded 3 per cent to 53,798 last year from 52,344 in the previous year. The numbers are projected to grow 14 per cent to 61,292 by 2023. Similarly, the number of ultra-high net worth individuals (UHNWIs) – who own more than $30-million wealth – in the UAE grew from 672 in 2017 to 693 last year and will reach 799 by 2023.

The study predicted that the number of UHNWIs in Dubai and Abu Dhabi will increase from 440 last year to 511 in 2023 and from 192 to 223, respectively.

Issam Kassabieh, senior financial analyst at Menacorp, believes that the ultra-rich will continue to flock to the UAE in coming years.

“At the moment, Dubai is attractive for foreigners. Now, it is a place not just for good investments returns but also to stay for long term. Government is focusing on key sector so that the cash comes in and stays in the country through different measures such as longer visas and ease of doing business initiatives,” Kassabieh said.

“The UAE is an attractive place for foreign investors – financial markets are at an early stage and have a long way to go. Real estate was the first to anchor the economy and that brought foreign investors here. Going forward, the focus will be on more diverse sectors. Also, the ease of doing business chart shows the UAE is first in the region and also competitive globally,” he added.

“Dubai offers a full package – good quality of life, healthcare, education and investment opportunities. All these complement each other and attracts high net worth individuals to this country. In addition to that, diversity of population plays a big role in this,” said Kassabieh.

Knight Frank data revealed that Dubai and Abu Dhabi will witness higher growth in UNHWIs as compared to Manama and Riyadh.

Raju Menon, chairman and managing partner, Kreston Menon, said the number of millionaires will undoubtedly continue growing in the UAE in coming years.

“Whatever the business challenges or revenue decline the companies are facing today, it is temporary. We need to look at long-term of 5 to 10 years. Millionaires should grow here in the UAE because money is available here so the investment avenues will be opened. The UAE’s economy offer big opportunities,” he said.

Menon believes that most of the new millionaires will be homegrown mainly in retail, trading, healthcare, real estate, services and shipping sectors. 

Iyad Abu Hweij, Managing Director of Allied Investment Partners, said the UAE, home to over 9.4 million residents, remains an attractive destination for HNWIs in the region.

With investor and business friendly policies, world class infrastructure and a stable outlook, HNWIs are expected to continue to grow in numbers in the country over the next coming years. Such policies and initiatives have played an important role in bolstering the confidence of investors and attracting Foreign Direct Investments in the UAE, which in turn creates jobs for a highly talented workforce,”  Abu Hweij said

Additionally, the UAE, viewed as a regional startup hub and a digital leader, continues to boast more startups than any other country in the region. Naturally, such startups attract more venture capital and private equity investments locally than anywhere else regionally, he added.

“The UAE continues to provide solid investment opportunities for investors locally and globally, which, along with a rapidly developing financial services sector, has played a catalyst like role for the growth of HNWIs in the country.”

Regional performance

The number of millionaires in the Middle East with wealth below $30 million grew three per cent from 446,384 in 2017 to 459,937 last year. The number is projected to grow 18 per cent to 541,311 by 2023. Similarly, the ultra-high net worth individuals with more than $30m assets grew four per cent year-on-year to 8,301 last year. It’s estimated that the number will grow 20 per cent over the next five years to 9,997.

According to Knight Frank forecast, the number of billionaires in the region will grow from 89 last year to 99 by 2023.

Globally, the number of millionaires with less than $30 million assets are projected to expand from 19.6 million in 2018 to 23.4 million by 2023, an increase of 19 per cent. While ultra rich will increase 22 per cent during 2018 to 2023 from 198,342 to 241,053.

waheedabbas@khaleejtimes.com

Climate Change, a clear risk and danger for investments

Climate Change, a clear risk and danger for investments

Gulf Times of Qatar in this ViewPoint dated February 26, 2019, elaborates on Climate Change, a clear risk and danger for investments that are not only increasingly apparent to all but very obvious especially where it hurts the most.

Climate risks pose a clear and present danger for investors

ViewPoint: Image processed by CodeCarvings Piczard ### FREE Community Edition ### on 2018-03-05 22:14:26Z | |

Extreme weather events are the most threatening global risks this year, the World Economic Forum warned last month.
The financial sector has for long worried that a crisis could shape up from growing climate risks. And insurers are increasingly concerned that rising temperatures will lead to a slump in property values that could spark broader financial turmoil.
In a report published last week, ClimateWise, a group run out of the University of Cambridge including some of the world’s biggest insurers, said increasing catastrophes linked to climate change could triple losses on property investments over the next 30 years.
The warning adds to concerns raised by Munich Re last month, which said a string of floods, fires and violent storms had doubled the normal amount of insurable losses. Munich Re said global climate-related losses may have topped a record $140bn last year, adding investors should look again at whether they’ve properly accounted for rising damages from weather catastrophes.
The German insurer reported $160bn of losses from natural catastrophes last year, some $20bn above inflation-adjusted averages in the previous three decades.
Wildfires in California have just caused a corporate casualty of climate change with utility PG&E Corp collapsing due to liability from two years of fires. 
When PG&E filed for Chapter 11 on January 29, it marked not just one of the largest utility bankruptcies in history; it’s also one of the first tied to climate change. 
PG&E, owner of California’s largest electric utility, made the move after estimating that it faced a $30bn liability from wildfires whose intensity has been blamed by state officials on worsening droughts linked to global warming. 
There are growing signs that global warming is causing noticeable dents in some of the world’s largest and most sophisticated economies.
A protracted drought in Germany that made crucial waterways impassable to ships shaved around 2 percentage points off growth in Europe’s largest economy in the fourth quarter of 2018. 
The US Defence Department last month warned climate change could compromise US security, with rising seas increasing flood risk to military bases and drought-fuelled wildfires endangering those inland. 
In December, the Bank of England said it would force banks to make better preparations for climate change after finding only a few had done so.
Make no mistake, the overheating planet is bad for the economy. 
Rising temperatures could curtail the pace of US economic growth by as much as one-third by 2100, according to research from the Federal Reserve Bank of Richmond in mid-2018. 
The climate impact could be disproportionately damaging to developing economies.
The world’s 100 poorest countries could be 5% worse off by the end of the century with climate change – wiping trillions of dollars from the global economy every year – according to research findings by the University of Sussex and La Sapienza economists in early 2018.
For sure, a collective global effort to enact stricter carbon emissions policies is a must to deal with global warming concerns. For the financial sector, not only should investors price in climate risks; but they need to incorporate scientists’ climate projections into their own catastrophe models.

Why has growth been the panacea to any development

Why has growth been the panacea to any development

Since time immemorial, and all in the MENA region know that growth or rather the lack of it for centuries, has brought only dire consequences. Why has growth been the panacea to any development never questioned?  Richard Heinberg, author and speaker, gives us his straightforward opinion in this article of ensia republished here below.

Opinion: Sooner or later, we have to stop economic growth — and we’ll be better for it

By Richard Heinberg
@richardheinberg , Author and speaker.

The end of growth will come one day, perhaps very soon, whether we’re ready or not. If we plan for and manage it, we could well wind up with greater well-being.

January 8, 2019 — Both the U.S. economy and the global economy have expanded dramatically in the past century, as have life expectancies and material progress. Economists raised in this period of plenty assume that growth is good, necessary even, and should continue forever and ever without end, amen. Growth delivers jobs, returns on investment and higher tax revenues. What’s not to like? We’ve gotten so accustomed to growth that governments, corporations and banks now depend on it. It’s no exaggeration to say that we’re collectively addicted to growth.

The trouble is, a bigger economy uses more stuff than a smaller one, and we happen to live on a finite planet. So, an end to growth is inevitable. Ending growth is also desirable if we want to leave some stuff (minerals, forests, biodiversity and stable climate) for our kids and their kids. Further, if growth is meant to have anything to do with increasing quality of life, there is plenty of evidence to suggest it has passed the point of diminishing returns: Even though the U.S. economy is 5.5 times bigger now than it was in 1960 (in terms of real GDP), America is losing ground on its happiness index.

So how do we stop growth without making life miserable — and maybe even making it better?

To start with, there are two strategies that many people already agree on. We should substitute good consumption for bad, for example using renewable energy instead of fossil fuels. And we should use stuff more efficiently — making products that last longer and then repairing and recycling them instead of tossing them in a landfill. The reason these strategies are uncontroversial is that they reduce growth’s environmental damage without impinging on growth itself.

But renewable energy technology still requires materials (aluminum, glass, silicon and copper for solar panels; concrete, steel, copper and neodymium for wind turbines). And efficiency has limits. For example, we can reduce the time required to send a message to nearly zero, but from then on improvements are infinitesimal. In other words, substitution and efficiency are good, but they’re not sufficient. Even if we somehow arrive at a near-virtual economy, if it is growing we’ll still use more stuff, and the result will be pollution and resource depletion. Sooner or later, we have to do away with growth directly.

Getting Off Growth

If we’ve built our institutions to depend on growth, doesn’t that imply social pain and chaos if we go cold turkey? Perhaps. Getting off growth without a lot of needless disruption will require coordinated systemic changes, and those in turn will need nearly everyone’s buy-in. Policymakers will have to be transparent with regard to their actions, and citizens will want reliable information and incentives. Success will depend on minimizing pain and maximizing benefit.

The main key will be to focus on increasing equality. During the century of expansion, growth produced winners and losers, but many people tolerated economic inequality because they believed (usually mistakenly) that they’d one day get their share of the growth economy. During economic contraction, the best way to make the situation tolerable to a majority of people will be to increase equality. From a social standpoint, equality will serve as a substitute for growth. Policies to achieve equity are already widely discussed, and include full, guaranteed employment; a guaranteed minimum income; progressive taxation; and a maximum income.

These are ways to make economic shrinkage palatable; but how would policy makers actually go about putting the brakes on growth?

Meanwhile we could begin to boost quality of life simply by tracking it more explicitly: instead of focusing government policy on boosting GDP (the total dollar value of all goods and services produced domestically), why not aim to increase Gross National Happiness — as measured by a selected group of social indicators?

These are ways to make economic shrinkage palatable; but how would policymakers actually go about putting the brakes on growth?

One tactic would be to implement a shorter workweek. If people are working less, the economy will slow down — and meanwhile, everyone will have more time for family, rest and cultural activities.

We could also de-financialize the economy, discouraging wasteful speculation with a financial transaction tax and a 100 percent reserve requirement for banks.

Stabilizing population levels (by incentivizing small families and offering free reproductive health care) would make it easier to achieve equity and would also cap the numbers of both producers and consumers.

Caps should also be placed on resource extraction and pollution. Start with fossil fuels: annually declining caps on coal, oil and gas extraction would reduce energy use while protecting the climate.

Cooperative Conservatism

Altogether, reining in growth would come with a raft of environmental benefits. Carbon emissions would decline; resources ranging from forests to fish to topsoil would be preserved for future generations; and space would be left for other creatures, protecting the diversity of life on our precious planet. And these environmental benefits would quickly accrue to people, making life more beautiful, easy and happy for everyone.

Engineering a happy conclusion to the growth binge of the past century might be challenging. But it’s not impossible.

Granted, we’re talking about an unprecedented, coordinated economic shift that would require political will and courage. The result might be hard to pigeonhole in the capitalist-socialist terms of reference with which most of us are familiar. Perhaps we could think of it as cooperative conservatism (since its goal would be to conserve nature while maximizing mutual aid). It would require a lot of creative thinking on everyone’s part.

Sound difficult? Here’s the thing: ultimately, it’s not optional. The end of growth will come one day, perhaps very soon, whether we’re ready or not. If we plan for and manage it, we could well wind up with greater well-being. If we don’t, we could find ourselves like Wile E. Coyote plunging off a cliff. Engineering a happy conclusion to the growth binge of the past century might be challenging. But it’s not impossible; whereas what we’re currently trying to do — maintain perpetual growth of the economy on a finite planet — most assuredly is.

Summit of the western Mediterranean countries

Summit of the western Mediterranean countries

Stability at the regional level and intensification of all partnership, for a lake of peace and shared prosperity.

After the mixed impacts of the Barcelona Agreement and the Union for the Mediterranean (UfM) activities, a summit of the western Mediterranean countries as a significant meeting will be held on 24 June 2019 in France to boost cooperation between countries of the two shores of the western Mediterranean.   The refocusing on the western Mediterranean is accompanied by the realization that the residents of this basin share not only primary common interests, particularly in the economic field but also security in order to establish a “strengthened association”. The objective being “resolutely political” to avoid a north-south fracture that could carry all the drifts and extremities, that can lead to major imbalances. For example, for this meeting, the migratory flux depends largely on the under-development of the disadvantaged regions of the southern shore of the Mediterranean and instead of feeding the misunderstanding about the idea of a “union” of the two shores.  Would it make more sense to conclude a pact of cooperation and solidarity limited to the States on both sides of the Western Mediterranean, a pact based on shared values and principles; a pact motivated by an objective of solidarity and development, in the framework of a win-win partnership?

Civil society, a significant player

We must be aware that all new international relations are no longer based mainly on personalized relations between heads of state but between decentralized networks and organizations through the involvement of the civil society which can promote cooperation, a dialogue of cultures, tolerance and symbiosis of the contributions of the east and the west.  It is dangerous to be locked up in a ghetto that would inevitably endanger life through violence. The latest events should make us think even better by avoiding this confrontation of religions because so much Islam, Christianity or Judaism have contributed actively to the flourishing of civilizations, to this tolerance by condemning any form of extremism. Future relationships between the two shores of the western Mediterranean composed of 5 + 5 countries can be enabling vectors. For, overall, southern Europe and the Maghreb cannot escape this adaptation to global mutations (the current crisis leading to profound upheavals in both geostrategic and socio-economic areas) and more globally in the whole of the Mediterranean region. For there is a need to overcome narrow chauvinistic nationalisms insofar as true nationalism in the future will be defined as the capacity to increase together with the standard of living of all populations by our contribution to global added value. The world is currently characterized by interdependence between countries. This does not mean the end of the role of the state but a separation of politics and economics which cannot be subjected to the vagaries of the economic situation, the State dedicating itself to its fundamental mission of macroeconomic regulator and macrosocial.  We firmly believe and after analysis that the intensification of cooperation between the two shores of the Mediterranean and more specifically between Europe and the Maghreb ought to be based on true co-development, with the possibility to disrupt bureaucratic behaviours of all conservative rentier annuitants and register them in a dynamic perspective profitable to the populations of the region. It is that the Mediterranean area can be a place of creation of logical networks allowing to communicate with distant cultures by promoting the symbiosis of the contributions of the east and the west. This network must promote communication links; freedom insofar as the excesses of corporate voluntarism inhibit any spirit of creativity.

It is that the Maghreb and Europe are two geographical regions presenting a millennial experience of openness on Latinity and the Arab worlds with natural links and in its whole door of culture and influences Anglo-Saxon.  It is essential for Europe to develop all the actions that can be implemented to achieve desirable balances within this set. The creation of weak regional economic spaces is a stage of structural adjustment within the globalized economy with the objective of promoting political democracy, a humanized competitive market economy, debates different ideas through social and cultural actions to combat extremism and racism the implementation of ordinary affairs. Thus, it is necessary to pay attention to the educational action because the thinking man and creator must be in future the beneficiary and the leading actor of the development process. That is why we are advocating the creation of a Euro-Maghreb university as well as a cultural center of the Mediterranean youth as a means of reciprocal fertilization of cultures for the realization of the sustained dialogue in order to avoid prejudices and conflicts sources of unnecessary tensions as well as a central Euro bank to promote trade. Algeria and France can promote the creation of these empowering structures.

Cooperation between the Maghreb and European 5 + 5 countries

It is in this context that must be apprehended a realistic approach to co-partnership between the two shores of the western Mediterranean where civil society will play a significant role, considering the fast approaching Fourth World Revolution in the geostrategic, economic, social and cultural fields.  At the global level, we are witnessing the evolution of a past accumulation based on a purely material vision, characterized by rigid hierarchical organizations, a new method of accumulation based on knowledge control — technological news and networked organizations, with segmented global chains of production where investment, in comparative advantages, being realized within sub-segments of these channels. As Jean-Louis Guigou, president of the IPEMED (Institute of Economic Foresight of the Mediterranean world, in Paris), it must be made clear that, in the interest of both the French and the Algerians, and more generally the Maghreb and Europeans as well as all the south Mediterranean populations. More precisely, economically the win-win partnership at the country level two shores of the Mediterranean, presents strengths and potential for the promotion of diverse activities and this experience can be an example of this global partnership becoming the privileged axis of rebalancing of southern Europe through the amplification and tightening of links and exchanges in different forms.  Exchanges can be intensified in all fields: agriculture, industry, services, tourism, education without forgetting cooperation in the military field, where Algeria can be an active actor, as shown by its efforts towards the stabilization of the region. Moreover, let us not forget the number of residents of Maghreb origins, and whatever the number, the diaspora is an essential part of the rapprochement between our peoples because it contains essential intellectual, economic and Financial. Also, must mobilize at various stages of intervention the initiative of all the parties concerned, namely Governments, diplomatic missions, universities, entrepreneurs and civil society.

The intensification of cooperation between the two shores of the western Mediterranean will only be possible if the involved countries have a realistic approach to co-development far from the mercantile vision and the spirit of domination, having a shared vision of their becoming.  The symbiosis of the contributions of the East and the West, the dialogue of cultures and tolerance are sources of mutual enrichment. The latest events should even better make us think, avoiding this confrontation of religions because both Islam, Christianity and Judaism have contributed actively to the flourishing of civilisations, to this tolerance by condemning any form of extremism. Globalization is a blessing for humanity if we integrate social relations and not confine it solely to merchant relations by synchronizing the real sphere and the commercial sphere, economic dynamics and social dynamics. At the time of the geostrategic tensions at the level of the region, the consolidation of large ensembles, the challenges of globalization, the rapprochement between the two shores is necessary for an intensification of cooperation, to measure the weight of the history that binds us. However, let us be realistic for in practice, the implementation of sound business, like the image of a country, no longer rests as in the past on personalized relations between heads of States or ministers but instead must be the result of decentralized networks, favouring the involvement of innovative, dynamic individual and companies. Tactics must be integrated within the strategic function/objective of maximizing the social well-being of the entire Mediterranean region.

Concerning the summit of the western Mediterranean civil societies on June 24, 2019 in France, this important international meeting will bring together, the heads of States and Governments, the President of the World Bank, the presidents of the EIB, the EBRD, the Director-General of the OECD and non-State actors of civil society in all their economic, social and cultural diversity. Its political launch will have on the 15th meeting of Ministers for Foreign Affairs of the 5 + 5 dialogue on 18 January 2019 in Valletta. Five groups have been set up: Morocco will lead the economy, and innovation component, Portugal, culture, Italy, sustainable development, Malta youth and mobility, and Algeria has had the most critical component, having been made responsible for the Energy Transition.  This could mean regional cooperation projects, conventional energies, non-conventional energies, renewable energy, energy efficiency, and in general proposing the new energy consumption model 2020/2030. His Excellency, the President of the Republic of Algeria, appointed professor Abderrahmane Mebtoul, expert International, to lead the Algerian delegation, at the International Meeting on June 24, 2019, in France.