High and sustained rate of economicgrowth in Yemen is a necesary, though not sufficient,condition for reduction of the high incidence of poverty andfor raising the living standards of Yemeni citizens.Evidence in this report suggests that the main obstacle torapid and sustained economic growth is the weak governancethat characterizes Yemen in addition to the weaknesses indomestic security, property rights, and rule of law systems.Weak governance in Yemen is characterized/manifested bywidespread corruption, lack of transparency andaccountability, inefficiency in the interaction of publicofficials and private business, ineffective or absent marketpromoting institutions such as those enforcing contracts(courts, tribunals, etc.), poor performance of the publicsector in terms of delivering essential goods andimplementing programs, associated lack of incentives andskills in the civil service, and weak enforceability ofcontracts and rulings. Along with ordering the governancesituation, there are areas that should receive governmentpriority in the short and medium term, including: 1)enhancing domestic security to boost economic activity inall economic sectors; 2) removing excessive and arbitraryregulations to strengthen basic infrastructure and otherservices and to attract private investment into thesesectors; 3) legal and judicial reform; and 4) sustainedimplementation of civil service reforms.
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