Middle East Needs Jobs, Governance to Fulfill Promise of Arab Spring

IMF Seminar underscores need for good governance in Arab countries

Governments should not "crowd out" private sector access to finance

Better targeted subsidies, other social protections needed for the vulnerable

At a seminar entitled “Beyond the Arab Spring: Restoring Economic Confidence, Meeting Social Needs,” a distinguished panel of speakers from the Middle East, North Africa, and Pakistan acknowledged the region’s progress toward building free and democratic societies. But they cautioned that this progress must be accompanied by urgent economic reforms if the change is to be lasting.

“Growth is not enough,” said IMF Deputy Managing Director Nemat Shafik, who moderated the session. “The Arab Spring demonstrates very visibly that, if it does not create enough jobs for the growing labor force, if its gains are not spread broadly and instead only captured by a privileged few; and if it is not accompanied by good governance and protection of the most vulnerable, growth will fail.”

Building a democratic culture

The debate centered on three main issues that are crucial for giving citizens better access to economic opportunity: governance and the business environment, access to finance, and protecting the most vulnerable.

Good governance, the group agreed, is a fundamental precondition for economic development in the Middle East.

Panelist Shaukat Tarin, former Finance Minister of Pakistan who is now Advisor to the Chairman of Silkbank, said that the pervasive culture of “crony capitalism” in the Middle East stems from the lack of a democratic culture. “Political parties that come into power have no history of inclusive and accountable democracy within their own ranks, and usually they gravitate toward charismatic leaders,” he observed. Because of this legacy of authoritarianism, he said, the region will need to strengthen its institutional framework for democracy.

Rather than look to the past, panelist Ahmed Galal noted that in the newly democratic Middle East, strong governance was critical.

“It is through good governance that you can have policies that serve the interest of the majority of the population, because everybody has a voice,” said Galal, who is Managing Director of Egypt’s Economic Research Forum. “It is also through good governance that governments can make credible commitments, because people will believe them.”

Panelist Jaloul Ayed, Tunisia’s Minister of Finance, noted that transparency is essential for good...