The Arab Spring and its Effect on the Arab Economy
Introduction
Without a doubt, the evolution of the Arab spring has indicated a challenge based on country’s political and economical long-standing notions of stability as it caused a crisis in not only different countries economies, but also political domain. This is because; it influenced the structures of democratization and economic growth of countries such as Libya Egypt, as well as Tunisia that experienced almost concurrently the effects of the Arab spring evolution. For many the Arab spring, remained as one of the drastic eruption of democracy movements that took place in the twenty first century across the Middle East and North Africa that eventually brought about the most important development of the century.
The outcome of the Arab Spring left a huge impact on the worldwide nations as it remained the largest producer of oil among other valuable resources thus, giving an opportunity for the affected international community to provide radically needed support given the drastic rise of resilient societies as it helped to bring stability to the region. More considerably, it is decisive to look at the theoretical framework of the Arab spring based on the effects of political instability, democratization and political transition in relation to economic growth besides undertaking a literature review focused on the Arab spring’s evolutions in Egypt, Libya and Tunisia.
Theoretical framework
The effect of political instability and the economic growth
In the contemporary Middle East and Northern Africa, the evolution of the Arab Spring was marked by a drastic wave of antiauthoritarian movements, as it began with earlier popular protest that began in late 2010. Afterwards, there was a wide spread across the Arab world as countries including Egypt, Libya and Tunisia later on faced the reality of the most serious and sustained challenge to autocratic rule. Eventually, the outcome of the Arab spring left the enfeebled authoritarian leaders overthrown as former President of Egypt Hosni Mubarak, the President of Tunisia Zine El Abidine Ben Ali as well as Libyan President Muammar Qaddafi were rendered powerless by the political democratization move protests. Above all, most political scientists focused on how drastic the authoritarian rule turned out to democratization as the persistent protests brought about democratic rule enforcement that had not been evident in the Middle East.
More than often, economic growth and political stability outcome remain deeply interrelated. This is because, in most cases uncertainty that arise as a result of unstable political environment is associated with reduced levels of investment and the speed of the economic development as the gross domestic product (GDP) rate decreases. More considerably, the effects of poor economic performance eventually leads to government collapse and political unrest as the government spending funds from incomes taxes become difficult to meet. As a result, the government depends on financial aid as inflation rates become persistent with no regulations taking place during times of political instability (Seymour, 1959).
More significantly, there exists a theoretical perspective based on the underlying relationship of the effects of uncertainty as a result, of political instability on productive economic decisions. This is because, the existence of political stability allows for increased economic growth because of steady investment, production and labor supply in the country’s economy. More considerably, there exists a high propensity within a change of government that is associated with the unexpected uncertainty that arises with the new policies of a potential new government. As a result, the shift in government policies uncertainties makes risk-averse economic agents become hesitant to take economic initiatives as other undertaking a shift as they exist the economy and invest abroad. Moreover, there is a tendency that foreign investors are more likely to prefer investing in a stable political environment that has less policy property rights uncertainty.
More considerably, there is a likely possibility of a government collapse in case of political instability as in the case of the Arabic spring lead to a new government. More so, the new government may become more prone to tax capital and productive activities as the political environment stabilizes as a result, it implies that there is achievable enhanced economic growth with a substitution in the productive domestic investments. Nonetheless, increased domestic investment could be consequently in favor of consumption and capital flight that would thereafter lead to a reduction of domestic production.
Democratization and the economics growth
According to the modernization theory, it is evident that as a natural outgrowth of economic development comes about the need for democracy is necessitated as socio-economic requisites reach certain levels. More significantly, the theory explains that the failure of modernization theory is the main reason for lack of democratization in wealthy Gulf States that had increased levels of economic growth as it expanded into being one of the most attractive investment regions with massively accumulated wealth. Considerably, the protests evident during the Arab spring in the Middle East are largely pointed out at the lack of democracy that hindered the welfare of the elite based on the byproducts of oil wealth (Barrington, 1966).
More significantly, the modernization theory is based on three assumptions. The first assumption is that of the transition process based on elite-led nations. This is because the opposition is between two elite groups of interest as the liberalizers who live in an authoritarian regime seek to gain influence and successful democracy over their non-liberal counterparts and civil society elite. Thereafter, the second assumption of the elite actors holding to power as they behave strategically follows suit. More significantly, at this point there are clear signs of possible transition as the incumbent authoritarians allow for the political system that give increased rights for individuals and groups. However, the move by the regime is not focused on achievement of democratization as it increases its base of public support. Thereafter, the final assumption is based on the elite group that represents civil society coming up in support of democracy in principle.
Considerably, the process of democratization befalls the existence of a battle over economic resources and autocracy that is usually sustained by an elite group that is always seeking to maintain its economic power position over the underprivileged masses. More significantly, there are economic consequences of democratization, based on Middle Eastern autocrats’ fear of redistribution of wealth.
Political Transition and the economic growth
In most instances, political transition accompanies the upsurge of increased economic risks as experienced during the Arab spring that occurred in the MENA (Middle East and North Africa) region. More considerably, the evolution of instinct democracies in the elite led nations with massive wealth gave rise to the inherent uncertainties in the political transition as many countries in the early twenty first century came up with persistent and social unrest that hindered the continued economic growth and political stability. More significantly, nations such as Egypt, Libya and Tunisia who are renowned as the leading oil exporters are facing a significant economic downturn, as they have limited fiscal policies implementation room considering the rising borrowing costs.
More significantly, the outcome of the Arab Spring revolution has resulted in a prolonged political transition, as there are difficulties evident in government’s process of defining a clear and credible guideline that will lead towards political and economic reform. With the increased levels of fiscal imbalances, unemployment, inflation, external position and growth as the effects of the economic downturn after the Arab spring fall out. There is a finely tuned level of indecision that has had economic fallout with many economic activities in these nations remain disrupted (Barrington, 1966).
Above all, as the interim governments take political transition from the elite rule there is a weakened investment levels as the political instability environment make investors less willing from investing in the large oil deposits as other risk free companies withdrew their investments. More considerably, there is a sharp decline of the foreign direct investment (FDI) inflows and export levels that led to a sharp decline in economic growth of many countries including Egypt, Libya and Tunisia in the year 2011.
In addition, the economic growth experienced a surging global commodity prices that eventually led to higher import costs in oil-importing countries as the oil producing countries regain from the loss experienced in the Arab Spring. As a result, the governments have had to pass on the increasing importing costs to consumers that have eventually led to increased government spending as the political transition seeks to cushion the public from other social unrest that are more likely to occur with increased costs. More considerably, the government influences the economy through subsidies that include the wage rise, besides subsidies on food and fuel that seek to alleviate the shock of the economic downturn, as well as higher import prices.
Literature Review
More considerably, the existence of interdependent structural challenges always poses a threat to the political stability of a nation. Hannum & Buchmann, (2005) elucidates that increased levels of social unrest arise in many countries that face challenges of high unemployment rates, lack of equality in the labor force participation rates besides increased low levels of private sector development. On the other hand, Salevurakis& Mohamed (2008) explains that social unrest arises from undemocratic forms of government with decreasing levels of gross domestic product per capita unemployment rate, weak public and corporate governance, limited competition, lack of well structured public sector and pervasive corruption. As a result, citizens who feel they are oppressed by the systems of rule undertake political reform as a way of handling the increased burden of poor standards and cost of living as they seek to better their living standards. More significantly, the current rise of Arab spring gives an opportunity of restructuring a more transparent and effective economic governance to bring out increased economic potential.
Body
More considerably, the Arab spring was an upsurge of social unrests against elite leaders who had denied the citizens their democratic rights, as they remained oppressed while a minority group benefited from the massive wealth in the Gulf State. More so, the evolution of the Arab spring indicated a challenge based on country’s political and economical long-standing notions of stability as it caused the crisis in leading countries in Middle East and Northern Africa. With much social unrest that led to change in structures of democratization and economic growth of countries such as Egypt, Libya and Tunisia that experienced almost concurrently the effects of the Arab spring evolution.
The revolution that occurred in Egypt was mainly because of increased discontent among the citizens who felt they were oppressed as a few groups of elite amassed wealth from their increased economic growth. More so, the revolution that was initiated on 25 January was evidently based on increased cost of living and unemployment rates as the obvious greed of a small group of politically connected business elite focused on seizing the benefits of the growth process. More evidently, in Egypt there was increased rise in the level of poverty because of increased cost of living especially with increased rise in the food prices while the gross domestic product (GDP) per capita in the economy was rising at a rate of 2% (Salevurakis & Mohamed, 2008). This gave a clear indication that most of the citizens in Egypt were earning low levels of income as the majorly get poorer while the overall country economic growth was increasing at a higher level as it benefited the few rich elites. More considerably, Egypt’s economy had reached a point of indignation that had a well-founded sense of social injustice and discontent.
Unlike other nations that experienced increased revolution, the Egyptian revolution was instigated by an increased level of social media as it played an influential task in the successful enactment of the antigovernment protests. More considerably, the existence of the social media communication among democratic movement groups sensitized the public to come up together and fight for income equality as wealth distribution in the economy was unequal with the rich accruing more wealth as compared to those from low-income households (Salevurakis & Mohamed, 2008).
More significantly, the social media sought to sensitize the public on the increased levels of increased members of the urban poor cluster who lived in areas without recreational facilities, sanitation, reliable electricity and other necessary services. In addition, the social media clearly portrayed the emphasis of inequality in land and asset concentration among the rich as it increased rates of absolute poverty. The increased use of the social media eventually led to the resignation of the country’s dictatorial leader, as the inaugurated government sought to propose the incorporation of the social media. This is because; the social media remain as an important resource for collective action especially in the organization of contemporary social movements.
More considerably, the evolution of the continuous trend of Arab Spring resistance was evident in Libya as the Gaddafi regime who was overturned with increased levels of social unrest and turmoil. It was indeed, one of the worst revolutions as thousands of lives were lost during the continuous upsurge of civil unrest with evidently increased levels of violent response by the army and rebels towards the political protests because of evident counterdemonstrators and the Libyan Civil War. More significantly, the source of the violence is administered to political dissatisfaction and economic desperations because the key rich elite groups that are favored by the political regime get access to the amassed oil exportation revenue as the gross domestic product per capita being lower as compared to the economic growth (Johnstone & Mazo, 2011).
Conversably, being the among the largest oil producing nations, the outcome of the revolution became a major of interest for international bodies even as the levels of anxiety and increased violence reached highly extreme level. As indicated by the global demand for oil in the chart below it was essential for large countries especially from west to engage them in the civil war as led by the United States intervention. Before the fall of the incumbent Gadaffi reign upon his death, the United nations gave a no fly zone sanction as the Western countries forces including British, US and French forces conducted air strikes over the nation as a political power vacuum that is believed could more ably open up the nation took power.
In Tunisia, an increased startling wave of protests occurred, as a democratic right groups lobbied against the lack of a systematic rule that allowed for equal rights among all the citizens. Just as the existing uprisings and revolutions that eventually swept across the Arab world during 2011 the outcome of the dramatic action that took place in Tunisia left policymakers, analysts and academics in a struggle as they try to come into terms with the tumultuous series of events that later on seems to continue unabated in other countries. More considerably, Tunisia is among the well to do nations in the Gulf Estate in terms of economic development, as it remained fully sufficient with the requirements of a structural economic transformation. This is because, its economic structure had moved from one that was initially based on the agriculture-based economy to a more modernized manufacturing and services economy (Haggard & Kaufman. 1997).
Even though, most attention has been focused inevitably, on other countries including Libya and Egypt that have in the past experienced the greatest amount of turmoil and bloodshed, there is a whole dramatic chain of events that have tremendously begun in Tunisia. This was later intensified by the upsurge of increased unrest that later on caught the intense international attention after the President Zine al-Abdine Ben Ali was toppled in January. This eventually led, to Tunisia getting into the world’s headlines as global attention was shifted towards the increased social unrest. More considerably, there are a number of important reasons, as to why Tunisia remains as one of the evolving nations as it followed the trend of other nations in the Arab Spring.
Most notably, when focus shift to the Tunisians revolt there is an evident trailblazer as Tunisia has set itself as the potential benchmark of increased protests accompanied by destructions that took place in major streets of the section from as far as Cairo to Misrata, as well as Manama and Homs (Schwarz, 2008). As a country, with fully installed structural economic transformation, the president of Tunisia did not focus on enhancing the structure as he hindered the move of Tunisia into a knowledge-based economy. Above all, after the collapse of Ali’s regime, the interim government, that was made up of technocrats, former and retired ministers among other sprinkling members of civil society, sought to come up by means of the structures of a fresh political system.
Conclusion
Without a doubt, economic growth and political stability outcome remain deeply interrelated. This is because, uncertainty leads to unstable political environment that is associated with reduced levels of investment and the speed of the economic development as the gross domestic product (GDP) rate decreases. More considerably, the effects of poor instability economic performance eventually leads to government collapse and political unrest as the experienced in Arab Springs as government spending increased with low income. More considerably, political structure influences the economic growth that takes place during times of political instability.
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