058 ESCEW 12 E - THE ARAB SPRING: ECONOMIC DIMENSIONS AND CHALLENGES

This report focuses on the relationship between economic conditions and political change in the MENA region. The failure of a number of MENA region governments to improve economic opportunities for their people was clearly a driving force shaping the dramatic political upheavals of the past year in that region. Indeed, pervasive economic frustration was at the heart of the initial protests. In Tunisia many young, educated and unemployed young people felt that the social contract in the country had simply broken down. 

Although the region is very diverse, the countries of the MENA region countries share several features that have impeded their economies from growing in a sustainable manner.  Growth rates in the region have been significantly lower than in other developing region of the world.  Poor regional economic integration and trade barriers contribute to a relatively low level of competitiveness and productivity growth. Significant levels of state intervention and over-regulation also impede commercial activity. These problems, in turn, have exacerbated the socially explosive problem of unemployment, especially among educated youth. Deep-rooted practices of cronyism and corruption have impeded the emergence of a more modern and autonomous private sector.

The region’s governments thus confront face a dire challenge.  They must generate growth while engaging in structural economic reforms that could be very unpopular in the short run. How this dilemma is managed will strongly condition politics throughout the region. But it is not clear that fragile governments are going to be able to conduct fundamental economic reforms without strong social consensus for doing so. Today, there are few signs that such a consensus exists.  Failure to reform could however result in enduring economic and political crisis...

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