Middle East and North Africa (MENA) region countries have unique demographic characteristics. Within the MENA region, Arab countries have higher fertility and population growth rates and a significantly younger age structure than other ountries and regions. This can be a “demographic gift or a demographic curse” depending on whether the high population growth and fertility can be transformed into economic growth.
In this study, the author examines the links between demographic change and fiscal policy in MENA countries, focusing specifically on the economic impacts coming from the conflict between social security and education, which are two of the most government programs in any country. The paper is unique as it incorporates a political economy model of education given expected increases in social security spending in the background. Labor movements and growth results are expected to depend significantly on the return to education. A sensitivity analysis on the parameter that shows the return to education spending reveals that MENA countries would suffer significantly from a lower return to education.