Economic Research Forum (ERF)

Moving beyond the Arab uprisings

971
Despite the popular movements for freedom and justice in several Arab countries a little over a decade ago, the region continues to be classified at the bottom of the world table of democracy. Nevertheless, this column argues, the uprisings have rung in the changes of an inevitable and deep-seated political and economic transformation in the Arab region: a change in the social contract is in the making, though its path and inception time remain uncertain.

In a nutshell

If national peace and equitable development are to be achieved in the Arab world, the old (pre-conflict) social contract, based on autocratic rule along with weak institutions, is no longer a viable option.

A new social contract needs to be put in place, one that reflects socio-economic inclusivity, institutional reform and democratic political governance that would ensure equitable power-sharing and accountability.

Economic policies in such a context require steering national economies away from severe depressions, maintaining balance between stabilisation and structural reforms, and setting up institutional mechanisms that ensure the proper management of rents.

The uprisings of 2010/11 in several Arab countries were motivated by a widespread popular desire to remove sitting autocratic rule. But as of late 2022, the popular cries for freedom and justice that they carried are yet to be translated into a genuine democratic transformation.

The uprisings in Egypt and Tunisia quickly succeeded in toppling the ruling elite and establishing a new regime: a return to autocracy in the first case and a form of democracy in the latter case. But they failed to bring about regime change in Syria, and are yet to be settled one way or another in Libya and Yemen. The region, as a whole, continues to be classified at the bottom of the democracy table.

One explanatory factor for these varying outcomes is continuous overt external interventions in support of one side of the conflict or another in the latter three countries. In turn, on the internal front, differing ‘ideological’ preferences of the contending factions – be they religious, political or social – have acted to obstruct national settlements irrespective of their possible outcome – that is, whether leading to democratic governance or not.

Looking at the economic and political fundamental variables that affect the probability of observing a civil war in a country, it appears to decrease with the development level and a more open economy both in the capital and trade accounts. It appears to increase with higher resource rents.

All of these factors increase the opportunity cost of violence. Furthermore, the probability of a civil conflict increases during economic downturns and with greater political polarisation, but it decreases when incumbents can secure loyalty via unequal access to public services given to their political constituency.

This analysis helps to explain why of the five Arab uprisings, four erupted in non-oil-rich economies where the authorities were not in a position to downplay the growing popular fervour for change via resource transfers to citizens in the context of prevailing sharp income and social inequalities, national political divisions notwithstanding.

Of course, additional factors also underlie the uprisings notably the conflictual nature of the region, fed by continuous overt external interventions, directly or via proxy wars.

In contrast, most oil-rich countries were in a better position to counter the clamour for political change via resource transfers to their citizens. In the case of Libya, recent studies point out that what underlies the overthrow of its central authority despite the country’s oil wealth was the absence of strong state institutions and the militarisation of its tribes.

Whatever the underlying factors for the general persistence of autocratic orders in the region, if national peace and equitable development are to be achieved in the Arab world, the old (pre-conflict) social contract, based on autocratic rule along with weak institutions, is no longer a viable option. Instead, a new social contract would have to be put in place: one that reflects socio-economic inclusivity, institutional reform and democratic political governance that would ensure equitable power-sharing and accountability. Otherwise, the seeds of conflict would remain.

At the same time, as demonstrated by the post-uprisings experiences, the road from autocracy to democracy, inclusion and greater socio-economic equality is not necessarily readily traversed, calling, as it does, for fundamental reforms of the existing fabric of economic, political and social institutions that can deal with existing political polarisation or the entrenchment of political and economic interests that could threaten intended reforms.

This is especially the case in the Arab region where the influences of oil wealth and multifaceted conflicts with all their external links continue to undermine moves to establish a democratic environment.

Once established, the new social contract would need to be buttressed economically and politically. At the economic level, this would call for policies that would:

  • steer the national economy away from severe depressions, lest they act as a spark for renewed political turmoil and conflicts;
  • maintain a proper balance between stabilisation and structural reforms;
  • and set up institutional mechanisms that ensure the proper management of rents.

Economic success, whereby the authorities in conflict-afflicted societies are able to generate public goods and services that have an impact on the welfare of the population, would bolster popular political support for fundamental reforms. Otherwise, the threat of a return to some form of autocratic governance will always be there.

So far, the experiences of four of the five Arab countries that witnessed uprisings in 2010/11 point to an opposite direction from institutional reform that cements national peace, democratic political governance and socio-economic inclusivity. We submit, however, that basically this is due to strong external and destabilising influences from which the region and these countries in particular continue to suffer, preventing them from reaching internal resolution on such fundamental reforms.

If and when these external influences recede, the internal environment favouring the implementation of reforms would be greatly strengthened. But even if disruptive external influences remain, it seems to us that the uprisings have rung in the changes of an inevitable and deep-seated political and economic transformation in the Arab region, though its path and inception time remain uncertain.

Most read

Egypt’s labour market: new survey data for evidence-based decision-making

As Egypt faces substantial social and economic shifts, understanding the labour market is crucial for designing policies that promote employment and inclusive economic growth. This column introduces the latest wave of the Egypt Labor Market Panel Survey, which provides fresh, nationally representative data that are vital for examining these dynamics.

The evolution of labour supply in Egypt

Egypt stands at a critical point in its demographic and labour market evolution. As this column explains, while fertility rates have dropped, reducing long-term demographic pressures, the ‘echo generation’, children of the youth bulge, will soon enter the labour market, intensifying the need for policies to accelerate job creation. At the same time, participation in the labour force, particularly among women and young people, is declining, partly as a result of discouragement.

Towards a productive, inclusive and green economy in MENA

Decarbonisation of the global economy is a huge opportunity for countries in the Middle East and North Africa. As this column explains, they can supercharge their development by breaking into fast-growing industries that will help the world to reduce its emissions and reach net zero, as well as offering greater employment opportunities and new export lines. Micro, small and medium enterprises in the region can lead the transition to a cleaner and sustainable future, but this may require the formation of clusters of firms that overcome some of the constraints that their limited size could involve.

Participation of Arab countries in global value chains

To what extent are countries in the Arab region participating in the global value chains (GVCs) that now dominate world trade? What are the main determinants of engagement in GVCs? And what are the expected benefits for Arab countries from joining them? This column answers these questions, concluding that it is important to focus on the products in which countries both enjoy a natural comparative advantage and can increase domestic value added in the intermediate and final parts of the production process.

Climate change: a growing threat to sustainable development in Tunisia

Tunisia’s vulnerability to extreme weather events is intensifying, placing immense pressure on vital sectors such as agriculture, energy and water resources, exacerbating inequalities and hindering social progress. This column explores the economic impacts of climate change on the country, its implications for achieving the sustainable development goals, and the urgent need for adaptive strategies and policy interventions.

Growth in the Middle East and North Africa

What is the economic outlook for the Middle East and North Africa? How is the current conflict centred in Gaza affecting economies in the region? What are the potential long-term effects of conflict on development? And which strategies can MENA countries adopt to accelerate economic growth? This column outlines the findings in the World Bank’s latest half-yearly MENA Economic Update, which answers these questions and more.

Assessing Jordan’s progress on the sustainable development goals

Global, regional and national assessments of countries’ progress towards reaching the sustainable development goals do not always tell the same story. This column examines the case of Jordan, which is among the world’s leaders in statistical performance on the SDGs.

Rising influence: women’s empowerment within Arab households

In 2016 and again in 2022, a reliable poll of public opinion in the Arab world asked respondents in seven countries whether they agreed with the statement that ‘a man should have final say in all decisions concerning the family’. As this column reports, the changing balance of responses between the two surveys gives an indication of whether there been progress in the distribution of decision-making within households towards greater empowerment of women.

Unleashing the potential of Egyptian exports for sustainable development

Despite several waves of trade liberalisation, Egypt’s integration in the world economy has remained modest. In addition, the structure of its exports has not changed and remains largely dominated by traditional products. This column argues that the government should develop a new export strategy that is forward-looking by taking account not only of the country’s comparative advantage, but also how global demand evolves. The strategy should also be more inclusive and more supportive of sustainable development.

International and regional financial integration in MENA

What are the effects of financial integration at both the regional and international level on the domestic economies of the Middle East and North Africa? This column summarises new research evidence on this question. The results suggest that while regional financial integration offers substantial benefits, ‘too much’ international integration could hinder financial development.