Republic of Yemen

Part one of the report provides an
overview of the economy. It has one chapter (chapter one),
which provides an overview of the country’s growth and
macroeconomic performance and challenges and analyzes and
emphasizes the limited dynamism of a rent- and
hydrocarbon-cursed economy. Part II describes cross-cutting
issues that constrain policy implementation, regardless of
the sectors where they occur. In chapter two, the report
draws on material outlined in the rest of the report to
argue that the policy problems that undermine the country’s
development can be linked directly to political distortions
introduced by the fragmentation among the population and the
elites. While the informal elite networks are able to
block reform and aggressively continue to seek rents that
might otherwise be recycled into development, the population
is unable to exert its rights and hold the elites
accountable. Chapter three analyzes the major impediments
in the business environment. Through the analysis of the de
jure legal and regulatory business environment as well as
the enforcement of business regulations, the chapter
identifies key legal and institutional changes that can help
reduce the opportunities for rent seeking that favor
well-connected businesses. Chapter four discusses the
opportunities to maximize the benefits of the country’s
human capital by enhancing the quality of worker skills,
increasing women’s labor force participation, and
facilitating the migration of Yemenis to work in the Gulf
Cooperation Council (GCC) countries. To achieve this goal,
the Republic of Yemen needs to enhance the quality of the
education system, especially technical education and
vocational training (TEVT), and respond to the existing
demand for skilled workers. Chapter five explores the
constraints to realizing the potential of agriculture. It
argues that a key constraint on the sector is the capture of
land and water by multiple elites motivated by short-term
rent extraction, which prevents the efficient management of
these assets and therefore undermines any possibility of
sustainable development. The chapter also discusses other
constraints and weaknesses affecting the sector and proposes
legal and institutional changes that could help increase
transparency in the management of the sector. Chapter six
analyzes the prospects for growth in the oil and gas sector
and discusses key governance reforms that would help reduce
rent seeking in the sector.