In 2018, the Center for International and Regional Studies (CIRS) at Georgetown University in Qatar launched a multiyear research initiative to study the state of the political economies of Middle Eastern states in the wake of the Arab uprisings. While many characteristics of these political economies remain intact—such as ruling bargains; strong state regulation over the market; weak private sectors; large, inefficient public sectors, etc.—there have also been several notable transformations since 2011. The mass uprisings triggered reforms in some countries, gave new authoritarian regimes unchecked powers in other states, and led to the near or total destruction of other economies, especially against a backdrop of civil wars raging in countries such as Syria, Libya, and Yemen.
In the 1980s and 1990s, the academic and economic policy communities were optimistic about greater economic integration between the Middle East and the global economy, but a combination of external and domestic barriers hindered such prospects, including ruling bargains, limited Foreign Direct Investment (FDI), overvaluation of currencies, and uncompetitive exports. Since the 2000s, however, a number of these factors evolved. Subsidies have been gradually shrinking, GCC states began the process of introducing taxes, and FDI’s have been increasing across the region, particularly from countries such as China and Russia—between 2000 and 2008, for example, inward FDI increased by around 3,800 percent. One puzzle regarding this inward FDI is that it did not bring significant short-term economic growth. Scholars have argued that the impact of the increase in inward FDI on economic growth might be seen on the long term instead. Another puzzle beginning to unravel is how the authoritarian regimes of the Arab states of the Persian Gulf succeeded in attracting inward FDI while also maintaining a strong grip over market regulation, and maintaining their ruling bargains. The effect of such changes on the prospects of further economic integration between Middle Eastern economies and the global economy is thus worth further investigation, and is a key area of study in this research initiative.
While the 2011 Arab uprisings carried hopes for more venues for public participation, policies of economic liberalization and reform remain in the grip of the few at the helm of power. In fact, it can be argued that state control over economic factors has been redefined and even strengthened. Countries, such as Egypt, have embarked on mega projects, mainly in infrastructure, rather than transferring economic factors from the public sector to the private sector, and the Arab monarchies of the Persian Gulf, particularly Saudi Arabia that has traditionally dodged the bullets of social reform, have indulged in extensive neoliberal economic reforms. Saudi has signed an ambitious five-year National Transformation Programme (NTP) to expand its private sector, and Qatar has been encouraging entrepreneurship, particular since the 2017 GCC crisis.
Despite these changes, the linkages between khaliji capital and the state in the Arab states of the Persian Gulf remain intact. Entrepreneurs often hold public positions, and social capital influences state-business relations. Hence, the division between the private sector and the state in the Arab states of the Persian Gulf is ostensibly fluid. Germane to this discussion, and another topic tackled by this research initiative, is whether attempts to transfer economic factors from the public to the private sector in the Arab states of the Persian Gulf are genuine.
In the wider Middle East, similar linkages between the state and businesses also exist, but are flagrantly selective and exclusive to a minority of business elites based on allegiance, ethnicity, and religious sect. The informal networks between the military-industrial complex and the private sector is an example. There has been an established literature on military economies, particularly in the Middle East, where armies in many of these countries have developed into corporations that exercise monopoly over many sectors, and control significant percentages of the economies of their respective states. A new phenomenon in recent years is that the military has been managing and consulting rather than executing projects, particularly in the construction field, creating informal networks between the military and the private sector; another significant phenomenon investigated in this initiative.
The selective nature of state-business relations in many Middle Eastern countries and the exclusion of the majority of the population from such economic privileges have contributed to the expansion of informal economies. Today, the size of the Middle Eastern informal sector is notably the largest in comparison to rest of the developing and underdeveloped countries. Although the informal sector in the Middle East is vibrant, suggesting that official data on economic growth might be misleading to a certain extent, the mechanisms and instruments of the informal sector contributing to its expansion remain largely understudied.
The CIRS research initiative on “The Political Economy of the Contemporary Middle East” adopts a multidisciplinary approach, examining a broad range of political, economic, social, and geographic dynamics in the region. It aims to explore a variety of topics, including prospects of globalization in the post-2011 Middle East; neoliberal policies in the post-uprisings period; military-private sector relations; state-business relations; development policies; the shifting boundaries of economic integration; state bureaucracy; mechanisms and instruments of informal economies; and the dilemma of foreign direct investments. The CIRS initiative addresses these increasingly important, but largely understudied, topics in Middle Eastern studies, and invites a number of experts to take part in in-depth, critical analysis of these pertinent issues.
Click here to read more about another related CIRS research initiative, “The Political Economy of the Gulf.”
Article by Islam Hassan, Research Analyst at CIRS