Religion and Economic Development

The Arab Spring has led to significant political gains for Islamists in Egypt and Tunisia. Islamist parties initially benefited from being the most organized and having a reputation for being incorruptible, but are now faced with the challenges of governing. The toppled governments in Tunisia and Egypt had been following neoliberal agendas while protecting bloated public sectors and directing state bank lending. The question is whether the Islamist governments can deviate substantially from this agenda.

The second plenary session of the 2013 ERF annual conference titled Comparative Economic Performance in Islamist-Governed Countries, examined questions as: what happens comparatively when Islamist parties attain power? Do these parties develop defining characteristics as far as economic development policies are concerned? Are the resulting development outcomes similar? What lessons can we draw from this comparative analysis for Arab Spring countries?

In her presentation, Michele Dunne (Atlantic Council), focused on the situation in Egypt and Tunisia. As both countries are going through a period of economic and political transition, Michele argued that it is not possible for Egypt and Tunisia to get through the many years of political transition without being undermined by economic collapse.

Following the 2011 uprisings, Tunisia chose a different political path than Egypt for it’s political transition beginning with withdrawing the military from politics and drafting the constitution before the parliamentary and presidential elections. To contrast, Egypt continued to receive foreign aid which was less than what was delivered to Mubarak’s government on annual basis. Although both countries started off at different places, both Tunisia and Egypt continue to face fundamental economic and political problems, added Dunne.

Hazem Beblawy, ex deputy prime minister of Egypt, focused in his presentation on the Egyptian economy arguing that despite the fact that the 2011 revolution has negatively impacted the economy, the Egyptian economy is performing better than what was expected. However, that does not negate the fact that Egypt’s financial situation is fragile. “The only way Egypt can move ahead is by increasing the productivity of the people by importing technology, making economic alliances, and most importantly by educating people about the problems,” added Beblawy.

Jillian Schwedler (University of Massachusetts), focused on what she thinks are the three key issues that Islamist parties are facing with regards to economic development. First, these parties are operating in an unstable institutional environment, where institutions are not clear, not well established, and where power is volatile. In this context of general instability, the policy-making process is very difficult, argued Schwedler. The second challenge that she identified is the challenge of organized labor where millions of people are willing to take to the streets if their demands for employment are not met. Finally, the third challenge according to Schwedler, is that ruling Islamist parties are pulled in different directions within the parties themselves.

The speakers concluded that it is still unclear how the presence of Islamists in the governments makes a difference in the economy. “We should compare these new regimes and new parties with other new parties in comparable institutional context and let the Islam question come in later, rather than starting with the question that they are Islamist and what’s going to be problematic about them from that perspective,” said Schwedler.

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