Paving the way for economic diversification in Iraq

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Guest blog written by Rana Abbas

Growing in a post-conflict country that faced enormous shocks and suffered drastic political, social, and economic changes over the past forty years, motivated me to enroll in the Harvard Kennedy School’s Implementing Public Policy course.

Over the past five years, I worked with government institutions and leaderships to support policy reforms aimed at advancing economic opportunities and help Iraq recover from the recurrent fiscal and economic shocks the country witnessed due to its several wars and endemic political instability.

Implementing Public Policy is the second course I joined with HKS after the Leading Economic Growth (LEG). LEG familiarized me with the experience of other economic experts from over 20 countries worldwide, working on launching policies to boost their countries’ economies and increase their income sources. The LEG course helped me realize the importance of leveraging expertise with different backgrounds and interacting with my professors and colleagues who succeeded or worked on driving a policy change. Though joining an online course for over four months is challenging, I believed that IPP will answer a lot of my questions regarding where to start when to promote new policies and how to gain your audience’s trust.

By March 2020, Iraq was facing a dual crisis due to the oil price volatility and the COVID pandemic, which amplified Iraq’s economic woes, reversing two years of steady recovery. These twin shocks have deepened the existing economic fragility as the country experienced the most significant contraction of its economy over 17 years.

To mitigate the crisis impact, the government launched a new reform plan to achieve sustainable medium-term growth. The plan included structural reforms that set out a path towards more sustainable development through economic diversification and boosting private sector growth and job creation.

As economic specialists in USAID, our role was to leverage our projects’ technical assistance services to help the government institutions implement the reform plan through supporting a governance framework that leads the reform matrix implementation in relevant ministries and government entities. As the reform plan was ambitious, international support seemed critical to help the government achieve tangible results. The main challenge I faced trying to lead USAID’s projects towards achieving the reform plan objectives was coordinating the policy reform priorities between different government entities, securing their buy-in.

The IPP course emphasized that sometimes our goals could be big, and to achieve results, we need to set realistic targets to gain our stakeholders’ trust. Thus, the course helped me realize that diversifying the economy and empowering the private sector are broad goals we need to flesh out and simplify into practical steps to be presented to the government leadership.

Looking at my fishbone diagram, it’s clear that crucial steps need to be taken to diversify the economy, putting it on a sustainable path that is less reliant on oil. To this end, creating fiscal space and reducing economic volatility could ultimately pave the way for sustained investments. Moreover, rationalizing public expenditures and limiting the public sector domination will also be paramount to easing the fiscal pressures. However, those are long-term as they require changes in the relevant laws and regulations that would need the support of high-level authorities.

Through the past 12 assignments I submitted over this course timeline, I developed good knowledge about the importance of conveners’ and authorizers’ role in forcing policy implementation. I also learned that securing the authorities’ commitment to deeply ingrain the reform and policy implementation momentum is critical. In my case, though the authorities have made important progress in pushing the reforms agenda, the path towards reforming the economic policies was unclear. The governance framework of the reform plan is geared towards promoting the private sector and economic diversification. However, the government experienced similar iterations to empower the private sector that didn’t achieve sustainable results. The challenge was to avoid the same situation by adopting the lesson learned into the problem-solving approach.

Here the rationale of using PDIA becomes clear. I learned that it’s important to widen our communication channels and be inclusive, securing maximum reach-out. Incorporating new mindsets would open new windows for innovative solutions. Though relying on past experience is useful, what worked before could not work now. Furthermore, successes achieved in other sectors, governments, or countries might not apply to any other country context. Therefore, the feedback we could secure by engaging relevant stakeholders at different levels could enrich the team discussions and ensure the public’s trust.

The IPP taught us how to break down the problem and use the PDIA to test our solutions. This changed my way of thinking about the problem, and instead of thinking about ways to diversify the economy, I narrowed down the problem to focus on areas where we could achieve quick wins. Improving the business environment seemed a priority, especially when focusing on aspects that are less dependent on political support and don’t require long-term regulatory reforms. We started analyzing the most frequently reported challenges in starting a business, including the lack of financial support or capital, business registration, and attracting investments. We were able to leverage the donors’ support to address those challenges. By taking those small steps, we were able to present success stories to the public that motivated the government officials to take further steps towards improving the business environment. Especially, government authorizers could see that would help them gain the public’s support, particularly with government election on the horizon.

The key takeaway I want to share with fellow PDIA practitioners and future IPP students is that learning by doing could be frustrating and expensive. Still, the experience itself is rewarding and will pay off even if we thought the journey would never arrive at its destination. Managing expectations and avoiding judgments without a thorough analysis of the problem is critical to ensure productive teamwork. Changes are hard and require a great deal of acceptance and considerations of others’ backgrounds and different mentalities. Solving a complex problem could be simple when assigned to teams rather than individuals. I learned valuable lessons during this course, and I wish the best of luck to the new IPP students in overcoming their policy challenges.

This is a blog series written by the alumni of the Implementing Public Policy Executive Education Program at the Harvard Kennedy School. Participants successfully completed this 6-month online learning course in December 2021. These are their learning journey stories.

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