Did Islamic laws hold back development in the Middle East?

Adeel Malik (Oxford University)

Adeel Malik (Oxford University)

Despite the geographic and cultural diversity of Muslim societies, Muslim countries remain significantly lagging behind in the industrialization race. Nearly 500 years ago, Europe surged ahead in industrialization and economic prosperity, while the Middle East witnessed a recurrent decline in economic fortunes. Dr. Adeel Malik, Globe Fellow in the Economics of Muslim Societies at the Oxford Centre for Islamic Studies, presented a study discussing why the Middle East failed to develop in relation to Europe. He investigates the divergence in development outcomes by relating this decline to the provisions of Islamic law and how they led to the underdevelopment of the private sector.

Malik argues that the law per se is only one part of the institutional framework; the enforcement and political structure are also important factors to take into consideration when assessing development. The study shows how Islamic law influenced the politics of the Middle East, exploring the underpinnings of religious authorities dating back to the Ottoman era. Religious provisions were incorporated in the bureaucratic structures and deeply impacted many economic as well as political decisions. For example, laws in the Ottoman period limited capital accumulation thus holding back private sector development.

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Costly squabbles: The solution to Tunisia’s economic problems lies in political consensus

This post was written by Niveen Wahish (ERF Communications Officer)

In three years of transition, the Tunisian economy has suffered tremendously, mainly because of the political situation. This message was at the heart of a policy seminar, organized by the Economic Research Forum (ERF), on “The Performance of the Tunisian economy in light of the ongoing political transformations”.

Moez Labidi (University of Monastir)

Moez Labidi (University of Monastir)

According to Moez Labidi (University of Monastir), Tunisia’s growth rate has dropped to around 2.5-3 per cent in 2013 compared to 5.6 per cent in 2010. In his presentation titled “Tunisia’s Macroeconomics; waiting for political stability and structural reforms,” Labidi listed the number of problems faced by the Tunisian economy during the transition and since the revolution in early 2011. To start out, the pressure on the local currency prompted the Central Bank to use the foreign reserves in order to stabilize the exchange rate. Reserves today are sufficient for only 103 days of imports compared to 2010 when they were sufficient for 147 days of imports. Unemployment is at 15.9 per cent; and this figure doubles among university graduates. Over and above, Labidi highlighted the fact that policy makers were being faced with social challenges, which involved an urgent need for jobs and investment, and the high expectations of Tunisians; while in reality the government had limited resources. The government sought refuge in easy solutions that caused deterioration in fiscal balances. As a matter of example, massive spending on wage increases, public sector hiring and bailing out the businesses after the revolution are factors, among others, that led to a major growth of public expenditures in 2013. On the other hand, poor governance in the democratic transition process resulted in what Labidi called “distrust shock”, which affected negatively the structural reform agenda. He acknowledged that while the transition governments succeeded in avoiding a credit crunch, they failed in creating what he called a “confidence shock”. The latter would have urgently allowed for reforms, thus creating more flexibility for public finances and positive consequences on the structural reform agenda, and accordingly the investment agenda.

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Socio-economic policies and the efficiency of democratic reforms

This post was written by Kaouthar Gazdar (PhD in Economics, University of Sousse), Hajer Kratou (PhD student in Economics, University of Carthage & University of Auvergne) & Zeinab Sabet (GDNet)

The fourth and last session of the workshop’s first day had a special focus on economic and social policies, and the efficiency of democratic reforms.

Eberhard Kienle (CNRS Paris/IEP Grenoble)

Eberhard Kienle (CNRS Paris/IEP Grenoble)

The session introduced two papers by Eberhard Kienle (CNRS Paris/IEP Grenoble) and Pierre-Guillaume Méon (Université Libre de Bruxelles). In his paper, Kienle examines the economic and social policies in Tunisia and Egypt in the aftermath of authoritarianism. Despite the intricacy of the Arab spring, it seems fair the assumption that large scale popular protests and the related transformation of political regimes were prompted by a combination of socio-economic and political factors. In a nutshell, authoritarian government had over years and decades prevented numerous actors to articulate their grievances in ways that would have allowed alleviating and addressing them effectively. Many of these grievances were related to socio- economic developments that widened the gap between income and opportunities on the one hand; and expectations based on past experience, official propaganda and comparisons with the outside world on the other.

Kienle challenges the idea according to which democratic regimes guarantee that such potential is actually translated into practice. In fact, and alike authoritarian regimes, democracies may fail to meet the expectations of the ruled. Less repressive by nature, they may even be challenged more quickly and more easily than their authoritarian predecessors or counterparts. According to him, the most important challenge for elected rulers in Tunisia and Egypt, besides the establishment and consolidation of democratic rules, is the formulation and implementation of economic and social policies that avoid past errors, and improve or secure the welfare of all within a broadly accepted framework of social justice.

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Democratization in the Arab region: The role of geopolitics and origins of political change

ERF’s workshop and policy seminar on “The political economy of transformation in the ERF region” kicked off with its first session dedicated to discuss the rise and fall of representative political institutions in the region on the one hand, and the factors that brought about political and economic change in the region on the other.

In his presentation, Sami Atallah (Lebanese Center for Policy Studies) shed the light on the importance of historical geostrategic routes from India to England and how it affected the rise of contemporary political institutions in the Middle East. According to him, a glimpse at the countries on the geostrategic route, and their comparison to the rest of the world (except Europe and North and South America), shows how countries on the route are more authoritarian than other countries which are not geographically on the route. By going back to history, in 1798 when Napoleon invaded Egypt, Sami argues that British interference in the political institutions, which derived from their need to secure trade, was detrimental to the evolution of political representative institutions in the region. As a matter of example, the British intervention to remove the Consultative Council in Egypt in 1866 or to prevent the creation of a Consultative Council in Dubai in 1930 affected the rise and evolution of political representative institutions in both countries. Introducing democratic institutions in such countries, which are on the geostrategic route, was much harder in the aftermath of their independence.

Read the paper “Connecting England to India: How Geostrategic Routes Shaped Political Institutions in the Middle East

Watch our interview with Sami Atallah

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The political economy of transformation – Determinants of democracy in the Arab countries

By Moamen Gouda (University of Marburg, Germany) and Zeinab Sabet (GDNet)

ERF’s workshop and policy seminar on “The political economy of transformation in the ERF region” kicked off this morning. The workshop aims at discussing a number of draft papers, submitted in response to a call launched by ERF under the theme of the workshop, among authors and experts in order to improve its final output.

Panel session 1

Panel session 1

The ERF call for papers comes amid speculations regarding the direction the transformation process in the Arab spring countries is heading to and its final destination. Although the workshop refers in its title to ‘ERF region’, the majority of papers to be presented throughout the busy two days of October have to do more or less with Arab spring countries, with a special focus on Egypt. This morning session shedded new lights on the determinants of democracy in the Arab countries.

Sami Atallah (Lebanese Center for Policy Studies) argued that the legacy of British colonialism significantly affects contemporary political institutions and the prevailing authoritarian regimes existing in the Arab countries, particularly the Gulf ones. Looking at the importance of geostrategic routes between England and India, Hadi attempts to show their impact on the rise of political institutions in the Middle East. According to him, interference in the political institutions due to the British need to secure the trade was detrimental to the evolution of political representative institutions in the region. Introducing democratic institutions on the route countries was hence much harder in the aftermath of the independence of such countries.

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The political economy of transformation in the Arab region

Almost three years after the Arab spring uprisings kicked off in Tunisia in late 2010, the Arab region’s politico-economic transition remains complex. Although some uprisings have succeeded in bringing down regimes when others were the source of mass violence and violations, their economic and political outcomes are still unclear. Political and economic transformations are interacting more than ever before throughout the region’s transition. But the question is what kind of economic and political outcomes are being produced?

In an attempt to provide a better understanding of the impact of recent political changes on the economy of the region, the Economic Research Forum (ERF) launched a call for papers under the research theme of “Political Economy of Transformation in the Arab World”. 6 out of 16 research proposals were selected under this competition and following a peer-review process.

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