Across the Middle East and North Africa (MENA), structural reform has once again returned to the centre of policy debate. Governments are announcing ambitious economic ‘vision’ strategies, international financial institutions are renewing calls for subsidy reform and private sector-led growth, and fiscal pressures have intensified in the wake of global shocks. Yet a familiar pattern persists: reforms are announced, partially implemented and ultimately diluted or reversed.

My view is that the repeated stalling of structural reforms in MENA is not primarily a failure of economic design. Rather, it reflects deep-seated political economy constraints rooted in rent dependence, elite bargaining and weak institutional credibility. Without addressing these underlying dynamics, reform efforts are likely to remain symbolic rather than transformative.

Rentier structures and the limits of reform

Longstanding analysis of the ‘rentier state’ provides a starting point for understanding reform resistance in MENA. Beblawi and Luciani (1987) showed how reliance on external rents – whether from hydrocarbons, strategic transfers or foreign aid – reshapes state-society relations by weakening taxation, accountability and political participation. In such contexts, economic reform is not merely a technical adjustment: it is a potential disruption of the implicit social contract.

Subsidy reform, labour market liberalisation and public sector restructuring threaten established mechanisms through which states distribute rents in exchange for political acquiescence. Empirical studies demonstrate that when reforms reduce material benefits without offering credible compensatory mechanisms, social and bureaucratic resistance intensifies (Cammett et al, 2015). As a result, reforms are often implemented selectively, delayed or redesigned to preserve core distributive arrangements.

From this perspective, the failure of reform is not accidental: it is frequently the rational outcome of political systems designed to prioritise stability over productivity.

Elite capture and ‘reform without transformation’

Even when reforms move forward, their implementation is rarely neutral. A growing body of research evidence highlights how structural reforms in MENA have been shaped by elite capture rather than competitive market principles. Privatisation and regulatory reform have often benefited politically connected firms, reinforcing market concentration and limiting entry (Diwan et al, 2016).

North et al (2009) conceptualise this dynamic as characteristic of ‘limited access orders’, in which economic reforms are adapted to preserve elite coalitions. In such systems, reforms may change formal rules but leave underlying power structures intact. The outcome is what might be called reform without transformation: on paper, markets seem to have been liberalised, yet competition remains constrained in practice.

This pattern has significant political consequences. When citizens perceive reforms as tools for redistributing privilege upwards rather than expanding opportunity, public trust erodes. Reform agendas become associated with inequality, not growth – undermining their long-term legitimacy.

Institutional weakness and credibility deficits

Structural reforms depend critically on credible institutions. Investors, firms and households must believe that policy changes will be sustained over time. Yet in many MENA countries, weak rule of law, limited bureaucratic autonomy and inconsistent enforcement undermine reform credibility (World Bank, 2020).

Policy reversals – often triggered by social pressure or elite contestation – reinforce expectations that reforms are temporary. This credibility deficit discourages long-term private investment, particularly in tradable and innovation-driven sectors that require stable regulatory environments. As Rodrik (2008) notes, institutional credibility is often more important than formal policy choice in shaping economic outcomes.

Without institutional anchoring, reforms remain episodic, reactive and vulnerable to political shocks.

The missing politics of economic transition

One of the most persistent shortcomings of reform discourse in MENA is its technocratic bias. Reform strategies frequently treat political economy as an external constraint rather than a central design variable. Yet comparative development experience suggests that successful structural transformation is inseparable from political renegotiation – over taxation, representation and accountability (Acemoglu and Robinson, 2012).

Where reforms have made incremental progress – such as in Morocco’s industrial policy or Jordan’s fiscal adjustments – they have been accompanied by social dialogue, targeted compensation mechanisms and gradual institutional adaptation. These cases do not represent wholesale success, but they underscore an important lesson: reform sustainability depends on coalition-building, not merely policy sequencing.

In the absence of such political foundations, reforms tend either to stall or to provoke backlash.

Policy implications

The core lesson is straightforward but often overlooked: structural reforms in MENA fail not because societies reject change, but because reforms frequently impose costs without altering the distribution of power and opportunity.

Future reform agendas must move beyond best-practice templates and engage directly with domestic political settlements. This does not mean abandoning reform ambition. It means reframing reform as a process of institutional trust-building, inclusive coalition formation and gradual renegotiation of the social contract.

Without such a shift, the region risks repeating a familiar cycle – bold reform announcements, limited implementation and eventual reversal – at a time when fiscal constraints and demographic pressures leave little room for policy failure.

Further reading

Acemoglu, D, and JA Robinson (2012) Why Nations Fail: The origins of power, prosperity, and poverty, Crown Publishers.

Beblawi, H, and G Luciani (eds) (1987) The Rentier State, Croom Helm.

Cammett, M, I Diwan, A Richards and J Waterbury (2015) A Political Economy of the Middle East (4th ed.), Westview Press.

Diwan, I, P Keefer and M Schiffbauer (2016) ‘Pyramid capitalism: Political connections, regulation, and firm productivity in Egypt’, World Bank Economic Review 30(3): 603-29.

North, DC, JJ Wallis and BR Weingast (2009) Violence and Social Orders, Cambridge University Press.

Rodrik, D (2008) ‘Second-best institutions’, American Economic Review 98(2): 100-4.

World Bank (2020) Trading Together: Reviving Middle East and North Africa regional integration in the post-COVID era, World Bank.