marek dabrowski what can arab countries learn from the post-communist transition? presentation...

Marek Dabrowski

What can Arab countries learn from the

post-communist transition?

Center for Social and Economic Research

Presentation prepared for the Annual International HSE Conference,

Moscow, April 2, 2013

Plan of presentation• Paper’s origins and geographical coverage

• Similarities and differences between “Arab socialism” and Soviet-type socialism– In political sphere– In economic sphere

• Differences in transition agendas

• Long-term development challenges

• What kind of lessons can be learned?

www.case-research.eu 2

• One of the outputs of the EU FP7 funded project on “Prospective Analysis for the Mediterranean Region (MEDPRO)” – WP5 on “Economic development, trade and investment” but based on earlier (2007) work

• Published as CASE Network E-Brief No. 9/2012 and MEDPRO Commentary No. 1/ May 2012


Paper’s origin

Geographical coverage• Countries of the former Soviet block (CEE & FSU)

vs. Arab republican regimes that emerged (1950s-1960s), as a result of military coups or anti-colonial resistance and considered themselves as “socialist”

• The latter include: Tunisia, Egypt, Libya, Yemen, Syria, Iraq and Algeria

• Jordan, Lebanon and Morocco do not represent “socialist” past but affected by the Arab Spring


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Similarities between Arab socialism and Soviet-type socialism - politics

• Dictatorship/ hegemony of one political party (lack of democracy and political pluralism)

• Manipulated election processes• Political dependence of the judiciary• The excessive power of the army, security agencies and police • Censorship, tight administrative control of grass-roots citizen

initiatives • Massive violations of human rights; organised repression of

certain social, political, ethnic or sectarian groups• However, similar characteristics of the authoritarian regimes

in other regions (Asia, Africa, Latin America); communism was not unique in this respect

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Similarities between Arab socialism and Soviet-type socialism - economy

• Dominance of politics and ideology over economic criteria• Price controls, subsidies, price distortions (especially food

and energy)• Key role of public ownership, political/ party/ military/

security nominations for managerial positions • Autarky, import-substitution industrialization,

protectionism• Burden of military/security spending• Social employment in public sector• Some of these characteristics present in non-socialist Arab

countries

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Where Arab “socialist” economies differed from Soviet-type economies?

• Greater role of private sector (agriculture, trade, services, small and medium size manufacturing)

• Private ownership never condemned and market institutions/ legal infrastructure largely in place

• Less distorted prices, less acute shortage of basic goods • Higher income and wealth inequalities• Less acute macroeconomic disequilibria• Less over-industrialization and less structural distortions• More economic openness and more contacts with the West

(economic relations, education, personal contacts)

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Arab reforms since 1980s - triggers

• Sharp decline in oil prices in mid-1980s

• End of Soviet support (end of 1980s)

• Reforms in CEE/FSU, China, India and other developing countries

• Pressure of the IFIs, US, EU etc.

• Ineffectiveness of the previous model

• Interest of elites to enrich themselves

• Seeking macroeconomic and social stability

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Arab reforms since 1980s – major steps

• Less price control, cutting subsidies

• Towards unified exchange rate

• Tighter fiscal and monetary policies

• Trade liberalization (unilateral, WTO, FTA with the EU, US, within the region)

• Greater role of private investment, including FDI

• Privatization (also with foreign participation)

• Financial sector reform, opening stock exchanges

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Agenda of Arab transition• Major political challenge: building stable liberal democracy• Economic challenges less dramatic comparing to CEE/FSU

in 1990s but:– Post-conflict reconstruction (especially Libya and Syria)– Avoiding populism (subsidies, reversing privatization, “witch

hunting”)– Continuation of previous reforms in more fair and transparent way– Addressing fundamental development challenges

• Major difference with the CEE (but not with FSU): absence of “European anchor”

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Socio-economic challenges in Arab world

• Low-to-medium-level of GDP per capita (apart from Gulf monarchies)

• High population growth• Low education level (including continuous illiteracy)• Gender discrimination• High unemployment, especially among women and youth• Poor business and investment climate • Remaining trade protectionism (tariffs, NTBs, LGI)• Poor infrastructure• Unsolved political conflicts between neighbors

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GDP per capita in PPP terms, current international dollars, 2010

15,168

14,435 14,384

11,151

9,4549,220

7,112

6,417

5,767

5,0414,794

3,548

2,599

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Lebanon CEE Libya CIS Tunisia MENA Algeria Egypt Jordan Syria Morocco Iraq Yemen

Abbreviations: GDP – gross domestic product, PPP – purchasing-power parity, CEE – Central and Eastern Europe (including Turkey but without Slovenia, Czech Republic, Estonia and Slovakia), CIS (Commonwealth of Independent States, including Georgia and Mongolia).

Source: IMF World Economic Outlook database, April 2012.


Literacy rates in selected Arab countries, compared to worst-performing post-communist country (Albania)

82%

94%

88%

85%87%

96% 96%

62%

84%

56%

89%90%92%

66%

73%

78% 78%

72%

80%

99% 99% 100% 99%

93%

89%

96%

72%

98%

99%

96%

100%99%

98%

50%

60%

70%

80%

90%

100%

Algeria(2006)

Egypt (2006) Iraq (2009) Jordan (2007) Lebanon(2007)

Libya (2009) Morocco(2009)

Syria (2009) Tunisia(2008)

Yemen(2009)

Albania(2008)

Adult total ≥15

Young female 15-24

Young male 15-24

Source: World Development Indicators database (http://data.worldbank.org/indicator).


Indicators of Gender Inequality

Country Population with at least secondary education (% ages 25+), 2010

Labour force participation rate (%), 2008

Female Male Female Male Algeria 36.3 49.3 38.2 83.1 Egypt 43.4 61.1 24.4 76.4 Israel 78.9 77.2 61.1 70.1 Jordan 57.6 73.8 24.7 78.3 Lebanon .. .. 24.1 74.8 Libya 55.6 44.0 25.1 81.1 Morocco 20.1 36.4 28.7 83.6 Palestinian Auton. .. .. 16.7 72.4 Syria 24.7 24.1 22.0 82.1 Tunisia 33.5 48.0 27.7 74.2 Turkey 27.1 46.8 26.9 74.6

Source: El Laithy (2012)


Lessons to be learned• Post-communist experience, especially of CEE not so

relevant for Arab countries (more similarities with FSU) but some general lessons remain useful

• Democratisation may prompt economic reform, but no automatic guarantees. Populist democracies are usually self-destroying

• Timing and speed of reform: do not miss political window of opportunity when is open, time works against reformers, reforms should be comprehensive

• The role of external support (EU, US, IFIs, Gulf countries). However, reforms serve country’s own benefit and cannot be used as the bargaining chip in negotiations with donors. Building the domestic pro-reform constituency is a key

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marek dabrowski what can arab countries learn from the post-communist transition? presentation...

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