Institutions and Economic, Political, and Civil Liberty in the Arab World

The Arab Spring disrupted an already turbulent region. A denial of economic freedom launched the Arab Spring but despite this origin, little economic thought has emerged in its wake. This lack of an economic policy vision may be under-appreciated and will make economic reform more difficult and create barriers to fulfilling aspirations for other freedoms and democracy. As global experience has shown, economic reform is important not just for its own sake but also for promoting and enabling other reforms.

This paper will focus on economic issues, particularly economic freedom, which is simply the ability of individuals and families to make their own economic decisions. It thus also provides a strong measure of free and open markets, which puts the power to choose in the hands of individuals and families, rather than of governments or crony capitalist elites.

In the 1990s, governments through the region embarked on a period of market-oriented reform. Yet, this era of reform proved to be largely illusionary, with Arab nations doing little better than the world average. The historic weakness of the Arab entrepreneurial class and the strong overlap between the political and economic elites led to effective resistance to reforms that reduced rent-seeking opportunities or the power of the elites. These factors also created a business elite more comfortable with rent-seeking than in developing competitive products. The lack of dynamism limited opportunity and job creation in the private sector. At the same time, the use of the public sector as a guaranteed employer, with more generous pay, benefits, and security and less challenging work than the private sector, led to the overwhelming preference across the region for public sector jobs, further weakening dynamism.

Thus, in much of the Arab world economic reform progress has been in slow reverse since the Arab Spring, and little popular or elite support has emerged for reforms which would increase economic freedom and produce the positive economic, social and political outcomes it brings.

The paper also provides a country-by-country survey of economic and other freedoms in Arab nations included in Economic Freedom of the World. Fast population growth and a youth bulge, as noted, are part of the economic challenge facing the Arab World. Data on these are provided in the descriptions of  each country. Data from the World Development Indicators (WDI) are given for the population under 14 years of age, which provides a good marker for the emergence of the youth bulge in the Arab world.