A Broken Social Contract, Not High Inequality, Led to the Arab Spring

Author:Shantayanan Devarajan - Elena Ianchovichina
Pages:1-4
SUMMARY

During the 2000s, inequality in Arab countries was low or moderate and, in many cases, declining. Yet there were revolutions in four countries and protests in several others. This so-called inequality puzzle can be explained by noting first that, despite favorable inequality measures, subjective well-being was relatively low and falling sharply, especially for the middle class and in the... (see full summary)

 
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IMF
Volume 18, Number 2 Summer 2017
www.imf.org/researchbulletin
B U L L E T I N
In This Issue
1
A Broken Social Contract,
Not High Inequality,
Led to the Arab Spring
5 Structural Reform
Packages, Sequencing,
and the Informal Economy
9 Q&A: Seven Questions
on Fintech
11 IMF Economic Review
12 Recommended Readings
From IMF Publications
13 IMF Working Paper s
19 Staff Discussion Notes
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Research Summary
A Broken Social Contract, Not High
Inequality, Led to the Arab Spring
Shantayanan Devarajan and Elena Ianchovichina
During the 2000s , inequality in Arab
countries was low or mod erate and,
in many cases, declining. Yet there
were revolutions in four countries
and protests in several others. T his
so-called inequality puzzle can be
explained by noting fir st that, despite
favorable inequality measures,
subjective well-being was relat ively low and falling sharply, especially for
the middle class and in the c ountries where the uprising s were most intense.
Increased unhappiness wa s associated with dissa tisfaction with the quality
of public services , the shortage of formal sector jobs , and corruption. The se
sources of dissatisfac tion suggest that the old soc ial contract, under which the
government provided jobs , free education and health care, an d subsidized food
and fuel in return for a subdued p opulation, was broken. T he Arab Spring
and its aftermath ind icate the need for a new social contract un der which
government promotes private sec tor jobs and accountability in serv ice delivery
and citizens partic ipate actively in the economy and society.
For decades, the Middle Ea st and North Africa (MENA) had been mak ing
steady progress in reducing ext reme poverty and inequality. Not only did the
region reach the United Nations Millenn ium Development Goals related to
poverty and access to i nfrastructure ser vices, but it made important strides
in reducing hunger and child a nd maternal mortality and increa sing school
enrollment (Iqbal and Kiendrebe ogo 2016). Inequality of opportunity dec lined
in Egypt a nd some other countries in the region (Hassine 2011; Assaad and
others 2015). Income inequality was either consta nt or declining in most MENA
economies and remained moderate by internat ional standards.
Standard development indicators did not capture t he growing discontent.
Once the uprisings occur red, however, is sues of equity and inclusion caught
the public eye. Income inequal ity was cited as one of the factors b ehind
the Egypt ian revolution (Hlasny and Verme 2013; Nimeh 2012; Ncube and
Anyanwu 2012; Osborn 2011). The idea that income inequality is lin ked to
revolution can be traced to ancient ti mes (Muller 1985). Today, e ven though
it is understood that tolerance for income inequa lity varies over time and
across countries (Hirsc hman and Rothschild 1973), high income inequality
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