INTRO: The US stock market was once a rich boys club. But now many Americans are invested and have a direct stake in the economy. Commentator and policy analyst Todd Moss says there’s an opportunity to make the Iraqi economy more democratic too.
SCRIPT: Want a way to give Iraqis a direct stake in their own economy? Revive the old Baghdad stock exchange once controlled by Saddam’s cronies.
An Iraq Stock Exchange may sound crazy. But it makes perfect economic and political sense. U.S. authorities had wanted to set up a new Baghdad exchange in an old Italian restaurant, reminiscent of the coffeehouses where European stock markets began. But they didn’t have the right people to get it off the ground.
With Iraqis now in charge, they shouldn’t look so much to Wall Street or London for lessons. To reap the real benefits of a stock market, Iraqis should turn instead to Johannesburg, Nairobi, and Casablanca.
In modern economies, like the U.S. and Europe, stock markets allocate capital and encourage savings. In Africa, Asia, and the Middle East, stock markets also help democratize the economy by letting even small shareholders own the country’s biggest companies. In South Africa, black women have formed investment clubs and joined the growing economy.
By involving ordinary citizens, stock markets build popular support for market reforms. Shareholders gain a stake in the long-term success of the enterprise. In Kenya the IPO of the national airline attracted more than 100,000 small local investors.
Stock markets also attract funds from the diaspora. Morocco and Ghana have used them to lure money back from citizens living overseas.
What better way to build national pride or a symbol of capitalism working in a new Iraq than creating a stock exchange?
No one would claim stock is as important as political freedom. But the ring of an opening bell in Baghdad would be a sign that economic recovery was well underway. Including as many Iraqis as possible in the reconstruction helps build democracy as well. In Washington DC, this is Todd Moss for Marketplace.
CLOSING: Todd Moss is a Research Fellow at the Center for Global Development