Four Years after the Spring

• Author: Adnan Mazarei and Tokhir Mirzoev
• Position: a Deputy Director, and is a Senior Economist, both in the IMF’s Middle East and Central Asia Department.

Four years ago, millions of Arab people filled the streets demanding political, social, and economic justice. It caught everyone by surprise. The Arab Spring unveiled significant economic weaknesses previously masked by years of economic and political stability. Underneath, despite seemingly improving poverty and inequality indicators and some progress with structural reforms, high unemployment, poor living conditions, and lack of economic opportunity had stirred a pot of frustration and dissatisfaction throughout most of the Arab world.

The Arab Spring made it clear that the economic framework and institutions in the Arab countries in transition (a term used by the international community to include Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen) needed to change. Since then, there has been some progress, but the core structural weaknesses in these countries’ economic frameworks have yet to be addressed. Although the region is now hostage to a number of conflicts, it is important to start chipping away at the task ahead.

Isolation and fragmentation

A key weakness of the Middle East and North Africa (MENA) region, including the Arab countries in transition, has been its relative isolation from the global economy and fragmentation as a region due to high barriers to trade and monopolistic markets. The MENA region holds less than 1 percent of the world market share in nonfuel exports—far below east Asia’s 10 percent and Latin America’s 4 percent—and less than a tenth of these exports are destined to stay in the region (Malik and Awadallah, 2013). Such seclusion in this age of globalization has meant slow economic modernization, limited transfer of technology, and, ultimately, low competitiveness and productivity.

Despite increased economic liberalization, the legacy of the economic development models of the 1960s and 1970s, which favored a large role for the state, lingered in various forms. Large and inefficient public enterprises and bloated civil services stifled the development of the private sector. More important, countries could not provide their people with adequate services despite their large public sectors. According to the United Nations Development Programmeâs index of âmulti-dimensional poverty,â well over a third of the people in these countries lacked access to health care, education, and other basic services such as sanitation, clean water, and electricityâtrailing most of the rest of the world. By contrast, 26...