World Bank study points to underlying causes of ‘Arab spring’

A widely accepted social contract, Ianchovichina says, is “critical for security” and “a broken social contract… increases the risk for civil wars.”
Monday 02/07/2018
A view of a pedlar's clothing stall at the Al-Attaba market in the centre of the Egyptian capital Cairo

A library could be stocked with books and reports trying to explain the factors that led to the “Arab spring” uprisings that began in Tunisia in 2010 and spread to much of the MENA region.

Most theories focus on economic stresses -- stagnant growth, widening inequality, unemployment -- that blended with social changes -- the youth bulge -- to create the “perfect storm” that led to dramatic political upheaval and three civil wars.

After extensive analysis of economic and social data in the years leading up to the “Arab spring,” Elena Ianchovichina determined that many of the common explanations are off target. Ianchovichina, a lead economist in the Office of the Chief Economist of the World Bank’s Middle East and North Africa Region, has published a book-length report under the World Bank’s auspices titled “Eruptions of Popular Anger: The Economics of the Arab Spring and its Aftermath” in which she argues persuasively that the underlying cause of the uprisings was “the broken social contract.”

After poring over data -- her book contains no fewer than 75 tables and graphs -- Ianchovichina said that, on the eve of the uprisings, “income growth, poverty rates and income inequality presented a favourable picture and suggested that the autocratic Arab regimes had delivered on economic, human development and shared prosperity goals.” Her data show, for example, that income inequality in most MENA countries in 2010 was narrowing, not widening.

The problem, she argues, is that millions of people in the region felt that their “subjective well-being” was deteriorating even as economic data pointed to improved conditions, a phenomenon known to economists as “unhappy development” -- economies are growing, as is per capita income, but people are not happy with their lives. The source of this phenomenon in the MENA region was, Ianchovichina says, “the broken social contract.”

Since independence, most countries in the Arab world featured a social contract in which the state provided subsidies, especially for food and fuel, as well as free education through college, a modicum of health care and secure public-sector jobs. In exchange, the public allowed authoritarian governments to run the show and elites to benefit. For decades, this contract generally worked, despite periodic hiccups, to maintain internal peace and stability.

However, by 2010, stressors had begun to appear: “Fiscal deficits associated with public-sector employment and high subsidies were becoming unsustainable. Government hiring slowed down and, in some cases, stopped. Unfortunately, the private sector was weak and did not create jobs fast enough to absorb the large number of young people entering the labour force,” Ianchovichina writes.

She does not explicitly point a finger at the policy prescriptions of the so-called Washington consensus -- spearheaded by the World Bank’s sister organisation, the International Monetary Fund -- but there is no doubt that the incessant demands on governments from international institutions and lenders to reduce public spending, open their markets and sell off public assets helped to erode the existing social contract.

As the social contract eroded, ordinary citizens -- especially those in the growing middle classes -- started to resent the percentage of national wealth that was being amassed by business elites, many of whom doubled as political elites. By the end of the century’s first decade, the social contract in many Arab countries had completely eroded.

As governments lost the ability to maintain their half of the contract, the public felt less keen to maintain its half: social stability and acceptance of non-democratic rule.

The solution that Ianchovichina proposes to address the problem that led to the “Arab spring” is to develop a “new social contract [that] must have at its core a strong private sector, supported by an efficient government that regulates enterprises even-handedly and is accountable to all citizens for quality services.” She calls for “a balanced mix of inclusive institutions that create incentives for cooperation, fair dispute settlement, redistributive policies targeted to the most vulnerable segments of society and rule-of-law institutions that protect and respect the rights of all citizens.”

All of this sounds nice on paper but implementation is another matter, made all the more difficult by the fact that “the Arab uprisings did not deliver the change people hoped for; instead, the situation deteriorated significantly throughout the Middle East and North Africa.” Since 2011, Ianchovichina says, there has been “a drastic drop in the quality of life throughout the region… the cracks in the old social contract have grown bigger.”

This means most of the socio-economic factors that triggered the 2011 upheaval endure today and have led to demonstrations year in Jordan, Tunisia and Sudan. Developing a widely accepted new social contract is not easy and could take an entire generation. Disaffection among young people in Tunisia demonstrates that even participatory democracy does not guarantee social stability under conditions of "unhappy development."

The underlying challenge is how to generate "happy development" -- an economy in which people feel their prospects for success are rising and their children will have an even better future. This is about more than just GDP growth. It's about quality of life and access to opportunity.

The challenge is great but the urgency is even greater. A widely accepted social contract, Ianchovichina says, is “critical for security” and “a broken social contract… increases the risk for civil wars.”