Monetary and Fiscal Institutions in Resource-Rich Arab Economies

This blog is written by Dr. Hoda Selim, Economic Research Forum

The Arab region discovered oil more than 70 years ago. Today, it holds close to half of global oil reserves and a quarter of natural gas reserves. It controls almost a third of oil production and 14 percent of that of natural gas. The hydrocarbon sector dominates these economies, accounting on average for 50 percent of GDP and fuel exports represent around three-quarters of merchandise exports. Moreover, these countries derive at least two-thirds of their fiscal revenues from hydrocarbons. Despite this tremendous wealth, resource-rich countries Arab countries have neither achieved economic prosperity nor became developed countries.

Recent research by the Economic Research Forum (ERF) has shown that weak institutions in the Arab World are the root cause of the resource curse, and that mismanagement of resources os primarily shaped by the prevailing political institutions which predated resource discovery. Over time, the interaction between these factors became intertwined, preventing these countries from embarking on a sustainable development path.

In an attempt to understand the role of institutions in shaping overall performance, the ERF has initiated new research work on macroeconomic institutions, both monetary and fiscal, and macroeconomic outcomes. The first research project is on “Institutional Requirements for Optimal Monetary Policy in the Resource-Dependent Arab Economies.” Led by Bassem Kamar, this work aims to assess the impact of monetary policy institutions including central bank independence and the interactions between monetary and fiscal policies on performance in resource-dependent economies.

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Shifting political economies of grievances: the generation of state cutbacks comes of age

This blog is written by Dr. Nisreen Salti, American University in Beirut

The uprisings that spread across the Arab countries, leading to the overthrow of Ben Ali in Tunisia and Mubarak in Egypt and putting incumbent rulers on guard across the region, are widely depicted as youth uprisings. Images of the crowds of protesters often show a sea of young faces. But young people across the world tend to take part in demonstrations and protests at a higher rate than their elders simply because they have more leisure time and fewer responsibilities to work and family, among other factors. To what extent, then, were the Arab uprisings truly youth movements, reflecting youth-specific grievances? Do the youth in Tunisia and Egypt show higher levels of dissatisfaction with government performance than older cohorts? Or are the grievances of the youth similar to those of other generations?

Another common reading of the uprisings characterizes them as movements of the disenchanted middle class. This view, advanced by the likes oNisreen Saltif Diwan, Gelvin, and Dai, holds that a large middle class emerged in the decades after independence, due primarily to state employment, important strides in education, and large-scale improvements in the provision of healthcare. This class is also thought to bear the brunt of the radical state spending cuts, the scaling back of public employment of the last few decades, and the failure of these economies to provide sufficient high quality jobs to enable social advancement. Is the middle class more disenchanted than other socio-economic classes? And is it most aggrieved about issues related to education and job markets, which are more closely linked with upward mobility than other sectors?

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Does mobilization relieve individuals’ sense of grievance or is it exacerbating?

From the corners of Cairo to the alleyways of Tunisia to the squares of Syria to the neighborhoods of Libya; tired frustrated hopeless Arabs are protesting with powerfully worded signs and slogans, utilizing social media, and taking a stand and a mass movement, that their voices be heard. Thus, what do we mean by a mass movement? Well, it is simply, a durable mobilization of a large number of active participants around a common policy or political purpose.   A movement is more than a protestor demonstration, in which participants may turn out once but are not durably mobilized around a common political goal.

Providing the impetus to mobilize!

The combination of positive and negative emotions helps energize action through their contrast. In this case, hope is considered as the positive pole of mobilization, while the negative pole is often the frustration of not having an impact or not being heard by the government.

During the first day of the ERF workshop “The Pulse of the Arab Streets”, a paper was presented by Evann SmithHarvard University -and Ashley FabrizioStanford University- co-authored with Stephen KosackUniversity of Washington- on “The Effects of Mass Mobilization on Perceptions of Well-Being in the Middle East”. They explain the mobilizations around the Arab Spring, examining the relationship between mobilization and citizens’ perceptions of their own economic well-being. They also focus on movements’ emergence, existence, scope, and primary tactics.

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How much was education paid in Arab labor markets in 2011?

This blog is written by Dr. Zafiris Tzannatos, Senior Consultant for Strategy and Policy

Not much! An extra year of education increases the wage of an otherwise average worker across the globe by 10 percent but in the Arab countries by only 5 percent.

This difference has been known for the last couple of decades but has been based on Arab estimates for only a few Arab countries that have micro Dr.Tzannatosdata, typically Labor Force Surveys. These countries usually included Egypt, Jordan, Morocco, Tunisia and Yemen and, spasmodically, Djibouti, Iraq, Lebanon, Mauritania and Palestine.   But what about the other Arab countries?   And rather than comparing countries at different points in time (for example, Djibouti in 1996 vis-à-vis Palestine in 2008), where did Arab countries stood at the time of the recent Uprisings?

We estimate the impact of education on wages across all 22 Arab countries based on income information included in Gallup surveys. This impact, known as “rate of return to education”, was estimated effectively for 2010-11. Though it is common to refer to the average (male and female) rate of return to education in a particular country, we consider this to produce a freak statistic and prefer to report it separately for women and men. First, the valuation of women’s work is (often strikingly) different than that of men’s – and not only in the Arab world. Second, women’s share in total employment varies significantly across different countries. In other words, what is the average price of 100 oranges and 50 apples?

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Gendering the Costs and Benefits of the Arab Uprisings in Tunisia and Egypt

This blog is written by Dr. Rania Salem, University of Toronto

Existing treatments of gender and the Arab uprisings have predominantly focused on three questions. First, they have sought to highlight the role played by women activists and women’s organizations in attempts to topple authoritarian regimes, and their continued struggles in the pursuit of “bread, freedom, and social justice.” Second, they have asked what the electoral success of Islamist political parties in several Arab countries means for women’s status. In many cases, these treatments have assumed or asserted thRania Salemat Islamist political agendas will exclude or disadvantage women. Third, these treatments have expressed concern for the legitimacy of women’s political claims-making in the post-uprising era, given the patronage women’s organizations received from the deposed authoritarian regimes in some countries.

Little is known about ordinary women’s perceptions of and responses to the broad social, political, and economic transformations witnessed since the Arab ‘Spring.’ People’s experiences and perceptions of the costs and benefits of the uprisings will likely be shaped by gender to the extent that gender affects individuals’ roles, vulnerabilities, and priorities.

My study addresses the following questions, with specific application to Tunisia and Egypt:

  • Have assessments of the economic and political situations improved or deteriorated since the uprisings, and does this differ by gender?
  • How does gender affect ordinary people’s assessments of the economic and political situations, and does this differ before and after the uprisings?

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Unleashing the contagious effect in dissidence in MENA

Dissidents actively challenge an established doctrine, policy, or institution; affecting a dissident movement when uniting for a common cause. Activists along with popular mobilization in the Middle East expressed wide scale dissidence. This resulted in the fall of long-lasting autocratic rulers in a domino-like fashion, referred to as the “Arab Spring”.

Yet, there are several unanswered questions related to the Arab uprisings. One of these questions is whether these series of uprisings were result of a wave of democratization that diffused across the Arab world or whether each country’s uprising is an independent event from its surroundings.

The second session of the ERF workshop “The Pulse of the Arab Streets” focused on the mass movements. Dr. Samer AtallahAmerican University in Cairo (AUC)- presented a draft paper on “Diffusion of Dissidence in Arab Public Opinion” that is co-authored with Dr. Mohamed Al-Ississ. The authors study dissidence in Arab public opinion before and after the wave of uprisings. Specifically, they are investigating the contagion effect in dissidence in public opinion. In other words, they are investigating whether the behavior of dissidence in neighboring countries interacted through public opinion or not, and whether the diffusion dynamics changed after the start of the uprisings in the spring of 2011.

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The Pulse of the Arab Streets

Three years into the transition following the political upheavals in the Arab world, the new rulers in several countries are facing daunting challenges. These include a difficult democratization process and deteriorating social and economic conditions. In most cases, there is little understanding about the ongoing transformations taking place in society, which complicate policy-making further.The Pulse of the Arab Streets workshop

In an attempt to address the above challenges; the Economic Research Forum (ERF); as an impartial regional network, has embarked upon carrying out a research project on “The pulse of the Arab Street: Understanding the Political Economy of the Arab Uprisings Using Novel Public Opinion Data” led by Dr. Ishac Diwan. This research program aims to study the various dimensions of the ongoing social, economic, and political transformations in Arab societies through its use of nationally-representative opinion surveys to examine developments and transformations on the “Arab street” through the eyes and voices of the most relevant yet most under-researched actors – ordinary Arab citizens.

In this regard, ERF will be holding a workshop on October 11-12 at Dauphine University in Paris. The objective of the workshop is to provide a platform for discussing the research papers and their findings among authors and experts in political economy in order to improve the final output.

Stay tuned and catch up on discussions and live updates by following us on @ERFlatest, ERF Blog and our YouTube channel.