The results by country grouping suggest that the infrastructure sector has the potential to contribute to employment creation in MENA, although it alone will not resolve the region’s unemployment problem. In the short-run every one billion of US$ invested in infrastructure has the potential of generating, on average, around 110,000 infrastructure-related jobs in the oil importing countries, 49,000 jobs in the developing oil exporting countries, and 26,000 jobs in the GCC economies (Table 9).

The region could therefore generate 2.0 million direct jobs and 2.5 million direct, indirect and induced infrastructure-related jobs just by meeting estimated, annual investment needs, but the potential varies greatly across countries,<sup>13</sup> and these jobs account for less than 2% of the labor force in the region. Put differently, these jobs would be foregone if countries decide to trim their public investment rates going forward. Infrastructure investments could provide a quick response and be part of the solution to the unemployment challenge, but infrastructure alone will not resolve this problem.

**Table 9 Estimated, potential job creation in response to meeting infrastructure needs in MENA**

||Infrastructure<br>needs<br>(billions)|Direct<br>jobs/billion|Total<br>jobs*/billion|Labor<br>force<br>(000) in<br>2009|Direct<br>jobs as a<br>share of<br>the labor<br>force|Total jobs<br>as a share<br>of the labor<br>force|
|---|---|---|---|---|---|---|
|GCC|15.8|20859|26194|16387|2.01%|2.53%|
|OIC|10.3|86566|109236|61598|1.45%|1.83%|
|OEC|20.7|39454|48573|52884|1.54%|1.90%|
|**Total **|**46.8**|**2 037 900****|**2 544 457****|**130 869**|**1.56%**|**1.94%**|

Source: Authors’ estimates. Notes: *Total jobs include direct, indirect and induced jobs created per billion US$ in the short-run. **The estimate of total direct jobs in the last row of the table refers to the jobs created by meeting annual infrastructure needs. This estimate is obtained by multiplying the estimated infrastructure needs for a particular group with the corresponding direct jobs estimated per US billion, and then summing up across groups.

# _Long-term employment effects_

The long-term employment effect of infrastructure investment in MENA could be significant. The study finds that the employment response induced by infrastructure investment resulting in 1% point additional growth is expected to be 9 million additional jobs in the course of ten years in MENA, or a little less than 1 million jobs per year. Such a response is significant as it accounts for approximately 30% of the jobs created in the region during the 2000s, and is based on assessments using employment-growth elasticities from ILO for 2009. Had these jobs been created during the last decade, the unemployment rate would be substantially lower than the 10% registered in 2009.

The infrastructure investment required to boost growth by 1% point depends on the output elasticity with respect to infrastructure. The lower the growth elasticity with respect to infrastructure, the higher the required increase in the stock of infrastructure. In a recent meta-

> 13 Because of per capita income differences, a given level of spending would generate more jobs in a sector in lowincome Djibouti than in upper middle-income Lebanon, but the latter would find it easier to finance investment expenditure.

13