Arab Spring economies to become more entrepreneurial?

Could there soon be a boost for businesses looking to trade internationally with some of the most challenging and under-developed economies in the world?

It has been a good 12 months since the seeds of the so-called Arab Spring were sown and the world watched on as revolution erupted first in Tunisia, quickly followed by Egypt, Libya, Yemen and beyond. Of course, the story is still unfurling and the region is far from settled, witnessed by daily reports from Syria.

But the wind of change is undeniably blowing, bringing political and potentially economic reform in its wake.

The dominance of the state in Middle East and Arab countries, together with a dependence on natural resources, has traditionally and effectively stifled the development of a strong private sector and international trading in the region.

More than 80 per cent of total merchandise exports in many Arab countries consist of oil and gas, and the Middle East accounts for less than one per cent of world non-fuel exports.

Turkey, for example, exports five times as much as Egypt which has roughly the same population. And inter-Arab trading is weak and has barely developed since the 1960s, largely because so many countries export the same thing – oil.

But change is coming because it has to. Dr Adeel Malik from Oxford University’s Centre for Islamic Studies argues that the mismatch between the demography and economic structure of the region is unsustainable.

In many Arab countries three-quarters of the population are educated young people under 30 looking for work in a region which has one of the highest rates of youth unemployment in the world.

“Recent events in the region provide an apt reminder that the prevailing development model has outlived its usefulness. This model, built on a leviathan state and financed by oil and aid fortunes, is fast becoming a liability,” Dr Malik says.

“The region needs a new social and economic paradigm that is based on a competitive, entrepreneurial and inclusive private sector. The expansion of regional trade between Arab neighbours is needed to create a larger market for Arab entrepreneurs,” he explains.

“During the next decade, an estimated 100 million jobs must be created in the Middle East. The public sector, already bloated and inefficient, is unprepared to meet this employment challenge. Sooner or later, Arab policymakers will have to return to addressing a longstanding development challenge facing the region: economic diversification.

“Removing barriers to international trade constitutes the Middle East’s single most important collective action problem since the fall of the Ottoman Empire,” Dr Malik adds.

Dr Malik is the Islamic Centre lecturer in development economics at the University of Oxford and a fellow of St Peter’s College, Oxford.

Read more:

Aljazeera, After the Arab Spring: creating economic commons, January 2012

The Economist, Arab Spring cleaning: Why trade reform matters in the Middle East, February 2012

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2 thoughts on “Arab Spring economies to become more entrepreneurial?

  1. Brilliant and informative piece, thanks. Having just spent 5 months travelling around the Middle East I agree with Dr Malik that the bright young things need to be put to work. I think we will see a very different Middle East as the young, educated population make their way into business and government, that’s if they don’t all leave first, as is the case in Pakistan.

  2. Thanks for your comment Gabrielle, you make some good points! It will be interesting to see what happens in 10 years time in the middle Eastern countries!

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