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The Arab spring that has shaken up Tunisia, Egypt, Bahrain and now Libya may not, some say, blossom flowers anytime soon. That’s the position economist Arvind Subramanian took last week in an op-ed in The Financial Times. In it he warned about the “immovable object” that the Arab world’s “seemingly unstoppable” young people will “quickly run up against” in toppling their autocrats: “economic rents.”
Economic rents are “easy money” from oil or aid that the region has been flush with for decades. Easy money, as Subramanian notes, that has been a curse. It has stymied democratic governance in the Middle East and has trapped the economies of the region in a negative cycle of low growth and under development. Why, after all, bother to create, build or produce when you can live off the dole? Turns out because that’s exactly what young Arabs want and are most certainly prepared to move any object to do so. Economic rents, like dictators, stand little chance. Politicians and their generals have taken note. The private sector would be wise to do the same.
Though countries like Egypt, Bahrain and Libya have benefited from economic rents, the majority of their people have not. That is not new. Hundreds of millions of Arabs have lived under the poverty line and struggled with unemployment for decades.[1] The reason this is a problem now is this:
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