Political Economy of the Middle East by unknow

Author:unknow
Language: eng
Format: epub
Publisher: Westview Press

CONCLUSIONS

Although the problems and contradictions of state-led growth are real enough, there is no simple, much less universal, set of institutional changes that can overcome them. The problems of economic growth and structural change are intractable, complex, murky, and deeply, inescapably political. Sweeping “reform packages” are always suspect, if for no other reason than that it is political folly for autocratic governments, especially after they have lost their legitimacy, to open up their economy to forces that they cannot control and that could someday support the opposition. It is also dangerous to offend everyone at once—which is what the economic logic of the Washington Consensus has often implied. As it has turned out, the benefits of the partial reforms that were implemented in the end tended to be mixed and unequally distributed, but still, as evidenced by the 2011 uprisings, profoundly destabilizing.

As we discussed in Chapter 7, much of the impetus for change came from the accumulation of debt and fiscal imbalances. Although these problems arguably had been building for some time, they became acute when oil prices collapsed in the mid-1980s. The decline of rents was widely noted at the time, and many analysts (including the authors of this book) thought that such a development provided an opportunity for real institutional change. As a simple generalization, one can say that many MENA governments have markedly improved their macroeconomic management but have postponed or simply balked at more complex reforms, such as privatization, regulatory reform, and development of the rule of law. On the structural side, certain changes certainly took place: many economies are now more open to trade, and the private sector in the region is more active than before.

It is hardly surprising that regimes implemented economic policy changes gradually and selectively. Most countries have reacted to the reduced external rents by working hard to generate new forms of domestic rents, especially by creating privileges for friendly private actors and by developing regulatory and other mechanisms to exclude actors perceived to be threatening to their interests. The result has been a very mixed picture in which regimes have embraced some economic reforms; on the whole, however, the private sector that emerged remained either too close (the “cronies”) or too far (the large informal sector) from government. The results of economic reform were thus disappointing. Although in some countries economic performance in the mid to late 1990s was considerably better than in the previous ten years, in no country has growth been strong enough to lower unemployment or significantly raise real wages and living standards in ways that could satisfy the rising tide of educated youth cohort joining the labor market.

In the end, only Turkey has made sweeping institutional changes. Other regimes have been able to manage the appearance of reforms but made little real change, and even in Turkey daunting challenges remain. The MENA economies survived the lean years of the 1990s,15 regimes did enough to stay afloat, and repression did the rest, especially in the RRLA countries, where the second oil shock reignited old traditions of patronage politics.

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