Economic Research Forum (ERF)

It’s too early to tell what happened to the Arab Spring

Did the Arab Spring fail? This column presents a view the consensus view from ERF’s recent annual conference in Morocco: careful analysis of the fundamental drivers of democratic transitions suggests that it’s too early to tell.

In a nutshell

Measuring the strength of civil society, its efficacy at staving off polarisation, its ability to forge broad coalitions, and the implications of all of that for choices about redistribution constitutes an important research agenda for political economy in MENA.

Transitions to democracy are fraught with the complexity of uncertain moments, moments that are crossroads where nothing is inevitable, and where agency and choice are paramount.

It is too early to pass a judgment on the failure of democracy in MENA or its successful consolidation in the West: the two regions are converging at a dangerous point of weak trust in institutions, high social polarisation and inhumane violence.

James Robinson’s keynote address at ERF’s 30th annual conference in Rabat, Morocco, asked why the Arab Spring had failed. The reaction in the room was: ‘It did not; it is too early to tell’.

It has been assumed that societies make the transition to democracy when certain conditions are met. These conditions include economic development, education, and a sizeable middle class. Research on transitions to democracy has attributed the consolidation and success of democratic transitions to the rule of law, a legal system that protects rights, especially property rights, and a tradition of belief in democracy’s intrinsic values.

That is the theoretical terrain on which Robinson and his co-author Daron Acemoglu expanded with welcome nuance in three of their seminal works: Economic Origins of Dictatorship and Democracy, Why Nations Fail and The Narrow Corridor. Indeed, it is advisable to stick to nuance and not rush to a declaration of failure or success.

In Economic Origins of Dictatorship and Democracy, Acemoglu and Robinson developed an analytical framework that assumed inherent conflict among social classes. Citizens want democracy while elites want less of it. They understood inequality to be a driver of unrest. Changes are likely to occur in societies with greater inequality: the higher the inequality, the more credible the threat of revolution. It is important to remember that Acemoglu and Robinson acknowledged that inequality is not only economic; ethnic or regional inequality – as in the Middle East and North Africa (MENA) and other parts of the world – may be a driver of change.

A focus on inequality invokes policies of redistribution as an option for the elites to diffuse social anger. This is very relevant in the MENA context. ‘What and whom’ to tax and ‘how’ to design redistributive policies are all critical political economy questions. Answers could determine whether the elite democratises or decides to resort to repression as a better option.

A focus on inequality and redistribution explains the challenging context of transitions to democracy in MENA, a region with a weak tax base, nascent programmes of social transfer, and rentier-based assets in the hands of unaccountable state entities. A focus on inequality and redistribution is thus crucial for understanding the challenging context of democratisation efforts.

Policies of social transfer and social protection are particularly challenging in context of high dependency on loans. Highly indebted countries must service the debt with little or nothing left to spend on education, health, mitigation of and adaptation to climate change, and a just energy transition. High debt that erodes investments in human capital and sustainable development simply deepens inequality and increases demand for policies of distribution.

That eventually brings a country back to a breaking point: to democratise, to distribute wealth more equitably, to combine distribution with repression or simply to resort to oppression. Of course, the cost of social demands for sharing economic and political power and the cost of elite repression are issues of perception – and therein lies the uncertainty of democratic transitions.

Inclusive institutions were the central focus of Acemoglu and Robinson’s second book, Why Nations Fail. They argued that inclusive institutions create order and protect property, both of which entice investment and innovation. But if order tips toward extractive institutions, nations may generate growth, but not inclusive prosperity. This view squares firmly with the current inclination in the development research to go beyond ‘growth’ adding sustainability, resilience and inclusion.

In their third seminal work, The Narrow Corridor, Acemoglu and Robinson ultimately arrived at liberty. They acknowledged that liberty is not the natural order of things: it is rare and fragile. Liberty, they argued, requires a strong society where social capital takes the form of civil society organisations or other less Western models of social collective action.

Acemoglu and Robinson did not equate strong associational life with harmony. Indeed, they reminded us that some strong societies are divided and polarised; and a strong society is not to be automatically equated with democracy. For example, they argue that India has a strong society but is highly polarised. Europe had stretches of history where society was well organised but had no democratic institutions. And the current situation in Europe and the United States is fascinating, both struggling to stave off right-wing populist and polarising political movements although they have strong and organised societies.

This is a valuable area of research in several MENA countries, including Egypt and Tunisia, to develop a better understanding of democratisation efforts in 2011. Measuring the strength of civil society (through such work as the World Values Survey, The Civicus Civic Space Index, BTI Transformation index, CSO Sustainability Index, ), civil society efficacy at staving off polarisation (e.g. the Global Initiative on Polarization), its ability to forge broad coalitions, and the implications of all of that for choices about redistribution constitutes an important research agenda for political economy in MENA. The same applies to the creation of a typology of social coalitions and assessing their influence on policies and institutions during a transition.

To avoid a political economy analysis that arrives at premature conclusions, it is advisable to combine economic modelling, grand theory and granular context analysis. Transitions are fraught with the complexity of uncertain moments, moments that are crossroads where nothing is inevitable, and where agency and choice are paramount.

Calling for the triangulation of economic modelling with grand theory and granular context analysis is not a call for cultural reductionism. The fact that the West and the Middle East are converging at a dangerous point of weak trust in institutions (including of international multilateral institutions), high social polarisation, and inhumane violence (the epitome of which is being committed currently by the so-called ‘only democracy in MENA’) tells us that ‘culture’ should not be an easy explanation, that it is too early to pass a judgment on the failure of democracy in MENA or its successful consolidation in the West.

Most read

Labour market effects of robots: evidence from Turkey

Evidence from developed countries on the impact of automation on labour markets suggests that there can be negative effects on manufacturing jobs, but also mechanisms for workers to move into the services sector. But this narrative may not apply in developing economies. This column reports new evidence from Turkey on the effects of robots on labour displacement and job reallocation.

Global value chains and domestic innovation: evidence from MENA firms

Global interlinkages play a significant role in enhancing innovation by firms in developing countries. In particular, as this column explains, participation in global value chains fosters a variety of innovation activities. Since some countries in the Middle East and North Africa display a downward trend on measures of global innovation, facilitating the GVC participation of firms in the region is a prospective channel for stimulating underperforming innovation.

Food insecurity in Tunisia during and after the Covid-19 pandemic

Labour market instability, rising unemployment rates and soaring food prices due to Covid-19 are among the reasons for severe food insecurity across the world. This grim picture is evident in Tunisia, where the government continues to provide financial and food aid to vulnerable households after the pandemic. But as this column explains, the inadequacy of some public policies is another important factors causing food insecurity.

Sustaining entrepreneurship: lessons from Iran

Does entrepreneurial activity naturally return to long-term average levels after big economic disturbances? This column presents new evidence from Iran on trends in entrepreneurship among various categories of firm size, sector and location – and suggests policies that could be effective in promoting entrepreneurial activities.

Intimate partner violence: the impact on women’s empowerment in Egypt

Although intimate partner violence is a well-documented and widely recognised problem, empirical research on its prevalence and impact is scarce in developing countries, including those in the Middle East and North Africa. This column reports evidence from a study of intra-household disparities in Egypt, taking account of attitudes toward gender roles, women’s ownership of assets, and the domestic violence that wives may experience from their husbands.

Manufacturing firms in Egypt: trade participation and outcomes for workers

International trade can play a large and positive role in boosting economic growth, reducing poverty and making progress towards gender equality. These effects result in part from the extent to which trade is associated with favourable labour market outcomes. This column presents evidence of the effects of Egyptian manufacturing firms’ participation in exporting and importing on their workers’ productivity and average wages, and on women’s employment share.

Do capital inflows cause industrialisation or de-industrialisation?

There is a clear appeal for emerging and developing economies, including those in MENA, to finance investment in manufacturing industry at home with capital inflows from overseas. But as the evidence reported in this column indicates, this is a potentially risky strategy: rather than promoting industrialisation, capital flows can actually lead to lower manufacturing value added and/or a reallocation of resources towards industries with lower technology intensity.

Financial constraints on small firms’ growth: pandemic lessons from Iran

How does access to finance affect the growth of small businesses? This column presents new evidence from Iran before and during the Covid-19 pandemic – and lessons learned by micro, small and medium-sized enterprises.

The economics of Israeli war aims and strategies

Israel’s response to last October’s Hamas attack has led to widespread death and destruction. This column outlines the impact thus far, including the effects on food scarcity, migration and the Palestinian economy in both Gaza and the West Bank.

Happiness in the Arab world: should we be concerned?

Several Arab countries have low rankings in the latest comparative assessment of average happiness across the world. But as this column explains, the average is not a reliable summary statistic when applied to ordinal data. The evidence from more robust analysis of socio-economic inequality in happiness suggests that policy-makers should be less concerned about happiness indicators than the core development objective of more equitable social conditions for citizens.