Why long-term policymaking matters for sustainable growth

June 09, 2022

Authors: Abdulla Qaddoumi & Zuhdi Hashweh

Government policies play a critical role in promoting economic growth and shaping tomorrow’s society. To determine the success of policy interventions, it is important to set clear targets and monitor performance. However, there is a risk that governments take a short-term approach to policy making and focus on delivering quick results, losing sight of important outcomes that are only realised through longer-term policy interventions. Most governments focus on meeting relatively short-term milestone targets, but is this adequate? 


The current focus on quick wins and short-term goals

Firstly, is there a tendency to put more emphasis on visible short-term success and overlook long term initiatives? The region is undergoing significant transformational change, from the need to diversify economies, respond to volatile commodity prices and the pressure to address climate change policies.

These accelerating changes require a focus on short-term results. More specifically, on generating immediate impacts through ‘quick-wins’, for example building a factory, or a hotel to create jobs quickly, where tangible results can be seen.

The focus of such initiatives can be seen through aggressive targets and the constant need to have tangible outcomes. While there are some examples of policy initiatives with longer-term goals, for instance declarations to achieve ‘net zero’ emissions by the UAE, KSA, and Bahrain in this region, there are many more initiatives that are short-term in nature.1

With the constant push for yearly results, policymakers risk losing sight of long-term policy goals but equally worthy policy outcomes.

Why is it important to adopt a long-term view?

At the heart of this is the idea of sustainable long-term growth. The OECD’s Sustainable Development Toolkit, which brings together good practice across OECD countries, states that “A strategic long-term vision is essential to support present needs and those of future generations in a balanced manner”.2

Short-term results are important, but some (arguably) very important initiatives tend to only have tangible results in the long-term, and it often takes a full generation to realise the outcomes. For instance, implementing changes in school curricula in science and mathematics is intended to equip the future generation with the required skills to meet the changing demands of the labour market - the needs of the rapidly-growing technology sector being a prime example. The real impact of such a policy can only be truly assessed after at least one generation of school children have fully graduated under the new curriculum and when these cohorts enter the workplace, which can take years.

Long-term initiatives can have longer lasting impact, so it is often worthwhile to prioritise such initiatives. While short-term goals can focus minds, an overemphasis on short-term aspirations may compromise the ability to deliver on longer-term goals given the finite resources countries have at any given point in time.

Sweden offers some lessons.3 After experiencing its deepest crisis of the century in the early 1990s, the Swedish government was determined to prioritise sustainable development once the short-term issues were addressed. Its approach was centred on ensuring that all policy decisions must take into account long-term economic, social, and environmental implications. These reforms also included: tax and pension reforms, changes in the transport and energy sectors, as well as an increase in funding in the agricultural sector for environmental and rural development. Employment and social development measures were introduced, targeting youths, the unemployed, and immigrants. One unique feature of its strategy was collaboration with the private sector to integrate sustainable development principles and environmental protection into business operations.

Sweden’s approach, while slow moving at first, eventually yielded benefits that have been sustained. The Swedish economy consistently outperformed the EU average in annual GDP growth and annual productivity growth, and has seen unemployment fall drastically, towards the end of the 1990s.4


How to avoid falling into the short-term thinking trap

How should countries therefore approach sustainable development so that they can continue to thrive both in the current and future generations?

Governments in the region should by no means abandon their current targets, but can include some long-term planning and initiatives using some of the following approaches:

●       Short- and long-term initiatives should not be measured using the same yardstick. Instead of judging all initiatives on the same set of criteria or KPIs, look to treat these differently so that they are not placed in the same conversation when assessing their performance.

●       Avoid an overemphasis on yearly targets for all initiatives/policies: It is important to assess annual performance, but it is often impossible to fairly evaluate the impact of a policy immediately for some initiatives. It can take up to a generation to observe long-lasting impacts of skills and education policies, or a meaningful reduction in carbon emissions.

●       Create a mechanism that clearly separates the performance review process of short-term and long-term initiatives. This can be achieved by isolating short-term initiatives from long-term ones when reviewing performance, through establishing a different set of KPIs.

●       Set clear intermediate targets and milestones for long-term initiatives to help make progress more tangible. For instance, if the goal of skills policies is to ultimately upskill a workforce through improving education curricula, then there are some intermediate milestones that can be tracked. This includes PISA scores in the short-term, in the medium term, the number of people from school cohorts that eventually go into STEM disciplines at university level can be tracked, and eventually, how many of them end up in STEM careers.

Adopting these principles will have profound implications for the ways in which governments make decisions about allocating resources to projects, and ultimately achieve sustainable growth.

1) For example, many of the vision realisation programmes under Vision 2030 have many ambitious short-term targets, such as creating a minimum number of jobs annually, or achieving a specific contribution to the Kingdom’s GDP.
2) OECD (2015): Policy Coherence for Sustainable Development Toolkit
3) A Swedish Strategy for Sustainable Development (2013)
4) Average annual GDP growth in Sweden averaged 2.7% between 1995 and 2011, compared to the EU-12 average of 1.7% in the same period, while productivity growth (measured by GDP per hour worked) in Sweden averaged 2.0% between 1995 and 2011, compared to the EU-10 average of 1.3% over the same period. Source: Lars Calmfors (2012): Sweden from Macroeconomic Failure to Macroeconomic Success

Contact us

Abdulla Qaddoumi

Senior Associate • Advisory, PwC Middle East

Tel: +971 50 817 5906

Zuhdi Hashweh

Senior Associate • Advisory, PwC Middle East

Jing Teow

Director, Consulting Economics & Sustainability, PwC Middle East

Tel: +971 56 247 6819

Follow us