By ERF Research Fellow, Hafez Ghanem, Vice President of the World Bank for the Middle East and North Africa.
Tunisia and Egypt were growing at around 4-5 percent during the period 2000-10, and yet their peoples revolted against existing regimes. A possible explanation for this is that the revolutions were not about economics. They were about demands for greater political participation. But the data does not support this explanation. According to the Arab Barometer more than 60 percent of Tunisians revolted against the Ben Ali regime because of a perceived economic weakness. Data from the World Values Survey indicate that in 2008 more than 30 percent of Egyptians were dissatisfied in spite of economic growth.
This does not mean that there were no political drivers for the Arab Spring. However, economic drivers were at least as important as the political ones. Arab dissatisfaction with economic conditions was probably due to the fact that the growth was not inclusive. There was a feeling that inequality increased and that a small minority, usually connected to political elites, reaped nearly all of the benefits of growth while most other groups were excluded.
Hence, a key lesson from the Arab Spring is that development policies need to focus on inclusion, and target excluded groups. Youth, smallholder farmers and women suffer most from economic and social exclusion in the Arab world. Young people face huge problems finding decent jobs, and the probability of unemployment even increases with the level of education which explains widespread unhappiness among educated youth. Whole regions of countries, e.g. Upper Egypt or Western Tunisia, feel excluded. Those lagging regions are home to the majority of the poor who largely depend for their livelihoods on smallholder agriculture. Arab women have the lowest labor force participation rates in the world and very high unemployment rates.
A development agenda that focuses on inclusion would have at least four components: developing small and medium enterprises(SMEs) in order to create jobs for youth and women; reforms of the education system to enhance quality; rural development and support to lagging regions; and institutional reforms to enhance implementation of policies and programs.
SMEs generate more than 60 percent of jobs in OECD countries. In the Arab world SMEs are virtually non-existent as the business landscape is dominated by a few large firms and many micro-enterprises. Reforms of the business environment, together with programs targeting SMEs, are needed to encourage SME growth, create decent jobs and expand the middle class.
Over the last few decades Arab countries have succeeded in expanding access to education but quality is a serious problem. Arab students continue to fail basic literacy and numeracy tests, and there is a disparity between the skills that students acquire at schools and universities and those required by employers. In particular, students do not develop 21st century skills like problem solving, communications, and working in teams. Therefore, education reforms need to include changes in the curricula and pedagogical methods, as well as institutional enhancements to hold schools and teachers accountable for student learning.
Support to lagging regions requires paying special attention to smallholder and family farming. This would include helping organize smallholders and linking them to domestic and international markets to increase their share in value added; improving access to land and securing titles; and increasing investment in research and extension and adapting them to the needs of smallholders.
Arab countries often adopt plans and policies that are technically sound but may not always reflect the needs of various stakeholders. Lack of sufficient buy-in by stakeholders leads to non- or partial- implementation. That is why there is a need to reform economic institutions to make them more inclusive and responsive to citizens’ needs. Arab countries could benefit from the experience of successful East Asian economies that put in place consultative processes (including concerned government departments, the private sector, and civil society) to agree on national development plans and monitor their execution.
About the Author
Hafez Ghanem is the Vice President of the World Bank for the Middle East and North Africa. He is a development expert with more than thirty years of experience in policy analysis, project formulation and supervision, and management of multinational institutions. Prior to his appointment as vice president, Ghanem was a senior fellow at the Brookings Institution in the Global Economy and Development program leading the Arab economies project, focused on the impact of political transition on Arab economic development. Between 2007 and 2012, he served as the Assistant Director-General at the Food and Agriculture Organization of the United Nations (FAO). He holds a bachelor’s and master’s degree in Economics from the American University in Cairo and a PhD in Economics from the University of California, Davis.