Political Economy of Growth in MENA Countries: A Framework for Country Case Studies

This paper lays out an analytical framework for the study of the political economy of growth. The framework incorporates consideration for:

• the types of domestic resources available for redistribution and the extent of waste that using each one of them entails
• the international and geopolitical sources of rent
• redistribution policies and institutions, analysing the ways in which they affect the economy
• institutional endowments of the country that define the position of policymakers vis-à-vis interest groups and each other

The special features of MENA countries that must be emphasised in case studies of the region are then outlined.

In terms of the MENA region, findings include:

• the most notable features common to many MENA countries is natural resource endowments, especially oil and natural gas, the abundance of the associated rents has reduced the need for taxation and increased vulnerability to the large fluctuations in the terms of trade
• military expenditure as a percentage of GDP in the MENA region is by far the highest in the world
• Compared to other regions in the world, MENA countries generally enjoy a much higher degree of ethno-linguistic homogeneity, however, ethnic divisions in some countries have been the source of major conflicts
• extreme centralization of decision-making and lack of representation have led to very poor quality and arbitrariness of many policies
• administrative and judicial institutions are notoriously ineffective in the region

Conclusions include:

• the interaction of economic performance and political economy factors is quite complex and it may be difficult to take all effects that matter into account when producing a framework for case studies
• individual case studies need to explore the relevance of all issues to their country and document the factors that they find have played a role in the adoption of policies and reforms
• with the feedback from the case studies to the framework and to each other, the hope is that a richer framework and a broader set of issues will emerge that can then be used for the generalization of the results