Challenges Facing the Arab Development Model

Challenges Facing the Arab Development Model

Timothy Taylor 06/10/2019 7

Here's a description of the Arab "social contract" and "development model" according to a recent report by Adel Abdellatif, Paola Pagliani, and Ellen Hsu, "Leaving No One Behind Towards Inclusive Citizenship in Arab Countries" (July 2019). It's an Arab Human Development Report Research Paper, written for the Regional Bureau for Arab States in the UN Development Programme. They write:

The social contract that emerged from and continues to evolve as a result of contesting and bargaining stemmed from the state-building and formation after Arab states won their independence in the 1950s–1970s. The emergence of independent states was associated with a strong nationalistic sentiment and the idea that the state should be the provider and engine of social and economic development. Despite considerable variation across countries, which was affected by natural resources endowments, the dominant model of development from the 1950s onward was having limited political participation and civil and political liberties in exchange for material benefits such as services, subsidies and employment. The model was based on strong central states overseeing and driving economic and social priorities while implementing wide-scale policies for redistribution and equity. It rested on four main pillars:

  • Establishing a large bureaucracy to provide and deliver services.
  • Expanding security services and the army.
  • Setting up a large public sector of factories and companies.
  • Subsidizing basic foodstuffs and energy products.

In keeping with the development model, a large share of total employment--often more than 20%--is in the public sector.

This model can claim some successes. For example, life expectancy at birth in Arab countries was about 55 years in 1970, below the world average of 58 years. Now, life expectancy in Arab countries is about 76 years, above the world average of 73 years. However, human development gains for countries in the Arab world have generally slipped back since 2010. The big drop in global oil prices back around 2014 has meant a reduction in resources for oil-exporting countries in the Middle East, and lower spillover buying power for the non-oil exporters in the region.

The emphasis of the report is that many of the countries in the region do not have "inclusive citizenship. For example, females in Arab countries lag males by more than the usual average for emerging-market economies in areas like education and political representation. The report notes:

The greatest measurable disparities are economic: globally women’s income is 57 percent of men’s, but Arab women’s income is only 21 percent of Arab men’s. Unequal gendered division of labour—both in unpaid care and domestic work and in the labour market—is a major characteristic of gender economic inequality across the Arab region. Women’s participation in the formal labour market remains among the lowest globally because of both cultural norms and weak incentives.

There are big gaps between rural and urban areas, and within urban areas, "[i]n at least seven countries with data, more than half of the urban population lives in slums." The concerns just keep coming:

Unaccountable and unresponsive public institutions as well as perceived widespread corruption often drive exclusion and disenfranchisement for large segments of the population. ... A substantial number of citizens believe that the institutions meant to take care of their needs are leaving them behind ... Trust in elected bodies, those that should be in charge of redesigning the social contract, is particularly low. Lack of trust is also reflected in low electoral turnouts—below 50 percent in most countries ... Perceptions of ineffective institutions seem confirmed by stagnating or narrowly based economic structures, high unemployment, young people facing difficult prospects to secure their future and uneven provision of social services and social protection nets. Unemployment, averaging 10 percent, almost double the world average, disproportionately affects young people, at 25 percent. ... 84% of the population is affected by or at risk of water scarcity. The decline of arable land and the dependency on food imports expose the population to risks of food insecurity ...

Part of what makes the report interesting is that it is from Regional Bureau for Arab States in the UN Development Programme. And the unmistakable theme is that the Arab development model and the associated social contract isn't working very well. Another part of what makes the report interesting is its hesitancy about suggesting alternative policy directions.

Yes, there's some discussion about how subsidies for energy prices that end up mainly benefiting the well-to-do, who after all use more energy, could be converted to to support for the poor. This is a problem in a lot of countries (for an overview, see this IMF working paper). But the challenges facing the Arab development model aren't about recalibrating some subsidies. The problem is that a "development model" based on high public employment, along with lots of social services and subsidies, needs substantial numbers of firms in a solid underlying economy to provide jobs and tax revenues and growth. 

A version of this article first appeared on Conversable Economist.

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  • Pete Chandler

    The Arab Spring ushered in dramatic change in North Africa and the Middle East, but democracy has struggled to take hold.

  • Rohan Jenyns

    Islam does not tolerate democracy. Shariah law just calls for Islam as law of land. Banish Islam and you will get progress.

  • Sean Fenegan

    Marriage of mosque and state. Simple.

  • Liz Golden

    Nothing will change in the Arab world

  • Jackie Doolan

    Do we need to search for a cause? Islam, easy.

  • Kyle Wagner

    How many Arab universities in the top 100 rankings ? What about freedom of speech and equal opportunities? Arabs are hilarious.

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Timothy Taylor

Global Economy Guru

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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