Business, Not as Usual

• Author: Vali Nasr
• Position: the Dean of Johns Hopkins University's School of Advanced International Studies and author of the forthcoming book Dispensable Nation: American Foreign Policy in Retreat.

It is no accident that the Arab Spring commenced in Tunisia instead of, say, Syria or Yemen.Â

It started there because of the promise of prosperity and growth. It started there because of the country’s large, literate middle class. It started there because of that middle class’s relatively liberal political outlook and thirst for the political freedoms that accompany economic prosperity.Â

In an environment of political stability and open economic activity, private enterprises flourish and economies grow, supporting the emergence of a middle class. It is that middle class, in turn, that pushes for further political change and bolsters democracy.Â

If the Middle East is to realize the democratic promise of the Arab Spring—and if the rest of the world is to enjoy the global benefits it would garner—countries in the region and abroad must foster private enterprise and the emergence of a strong and vocal middle class.

Fertile ground

When protests erupted across Tunisia in January 2011, the economy was open and vibrant. The population was educated and technologically adept—20 percent of the population used Facebook to communicate with family and friends at home and abroad.Â

During the decade leading up to the Arab Spring, Tunisia was enviously referred to as the “China of the Arab world.” Although it was authoritarian and beset with corruption, it was also integrated into the global economy through manufacturing exports and tourism and was growing at a rate comparable to those of large emerging economies. This growth produced the middle class that ultimately pushed for political change.Â

For more than a generation, most of the Arab world has suffered from economic stagnation. State control of economies has produced bloated red-ink-generating public sectors that have crushed innovation and entrepreneurship while shielding inefficiencies behind government protection and high tariff barriers.Â

As a result, the Arab world has fallen behind other developing regions. It suffers from a sclerosis that has deepened poverty and frustration. And this is only aggravated by the demographic “youth bulge” in the region.Â

If this picture does not change—if the Arab world fails to follow in the footsteps of successful transition economies in eastern Europe, Latin America, and southeast Asia—the region will not only fail at democracy, but will also grow poorer and more unstable. And that will lead to myriad social and political problems that could threaten global security and economic prosperity around the world.Â

The most obvious risk is the familiar specter of extremism and terrorism, but fratricidal regional conflict, humanitarian crises, and large-scale labor migration to Europe are also worrisome threats.Â

Private sector–led growth

The Arab population today numbers 400 million, which will double to 800 million by 2050. Population growth makes aggressive economic growth an urgent imperative. Even to tread water and maintain current living standards, the Arab economies would need to grow at “tiger-economy” rates of 9 to 10 percent for a decade or more. That is a daunting task, one the public sector cannot accomplish alone. Growth must come from the private sector, and that requires reform of the economy: removing regulations, relaxing government control, promoting trade, and bolstering the rule of law.Â

The region clearly has the potential for private sector growth. In the past decade, the opening up of economies—most prominently in Tunisia, Egypt, and the United Arab Emirates, as well as in Jordan and Morocco—and...