Panel 7a The Economics of the Arab Spring

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Chair: Professor Fawaz Gerges, Director, Middle East Centre, LSE

Discussant: Dr Bassem Awadallah, Secretary General, Islamic Chamber of Commerce and Industry

Paper 1: Oil and Development in the Middle East
Professor Richard Auty,
Professor Emeritus, Lancaster University

This paper seeks to offer critical reflections and fresh comparative perspectives on the political economy of oil in the Middle East, focusing on a question of wider interest: how do natural resources shape paths of economic and political development? While this has received considerable analytical and empirical interest from researchers, the related discourses on (a) political economy and (b) natural resources have curiously ignored a systematic analysis of the Middle East—a resource rich region par excellence. Given these analytical and empirical gaps, this paper argues for developing a rich multi-layered, but rigorous, narrative of the political economy of the Middle East. The paper aims to: (a) set out the limitations of the global literature on natural resources, institutions and development; (b) critically summarize the deployment of external windfalls in the Middle East; and (c) contribute insights from the Middle East to the general ‘resource curse’ and development literature. >> download the paper

Paper 2: After the Arab Spring: Creating Economic Commons in the Middle East
Dr Adeel Malik, Globe Fellow in the Economies of Muslim Societies, Centre for Islamic Studies and Research Associate, Centre for the Study of African Economies, University of Oxford (co-authored with Dr Bassem Awadallah)

Two forces that will significantly shape the Middle East’s future are (1) the demographic transition marked by a growing number of young people entering the labour market and (2) an economic structure defined by excessive reliance on oil and hydrocarbons. This paper argues that the challenges of demography and diversification are inter-linked. Without a private sector that is integrated with regional and global markets, the region is unlikely to convert this youthful transition into a productive transition. While existing political equilibrium in the region may not favour an independent private sector, the new demographic forces can unleash processes that may alter the preferences and constraints of governing elites and international stakeholders. A key argument of the paper is that the region may first need to regionalize before it can effectively globalize. A necessary step in this regard is to create an infrastructure of cooperation to solve what is arguably one of the most important collective action problems of the Middle East. >> download the paper

Paper 3: Political economy of the Arab Spring in Egypt – the long view
Dr Mina Toksoz,
Head of Country Risk, Standard Bank
 International

The socio-economic changes in the Arab economies that led up to the recent wave of protests and regime changes have not been sufficiently analysed. In relation to Egypt and elsewhere, there has been an appreciation of the impact of youth unemployment and demographic trends, but this has been over stressed. It is necessary to analyse the longer term trends in the region to understand the peculiar form that these political changes have taken to be able to highlight possible future trends.
The “revolution” in Egypt can best be understood by evaluating the previous successes and failures of the policies of the Mubarak government, the rise not only of his close cronies but also of business elites in other sectors not in the close circle of Mubarak, the weakening and alienation of the public sector bureaucracy, the increasing costs of the ever-growing security apparatus, the unsustainable rise of energy subsidies, and the marginalisation of large sections of the professional and self-employed middle classes. All this took place against stagnating EU and US economies that reduced the potential for international financial support that had helped Egypt overcome its previous fiscal and foreign payments crises.
The political struggles currently underway reflect the bid for power of those social forces previously held back by the Mubarak regime.  These are led by the aspiring middle classes, that are mostly aligned with the Moslem Brotherhood, and the rapidly growing business elite keen on continued integration with the regional and global economy. The outlook for Egypt’s economy is likely to depend on the parameters of this new economic alliance.  However, two forces complicate this process and suggest that a new settlement will take time and not be easy. One is the Egyptian army, with its extensive economic interests.  The pressure for the military to reduce its role in the economy is likely to increase; this process is unlikely to be smooth and remains a significant risk. The second is the rediscovered strength of popular movements of youth and trade unions which are likely to demand an improvement in democratic rights and increased employment opportunities and living standards and will not accept a return to autocratic rule. Islam looks set to play an ever increasing role in providing the glue to this new social settlement.

The views expressed in this paper are those of the author and do not necessarily represent the views of, and should not be attributed to, Standard Bank International.

These are abridged versions of the abstracts submitted by  the presenters.
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