Eruptions of Popular Anger: the Economics of the Arab Spring and Its Aftermath
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MENA DEVELOPMENT REPORT Eruptions of Public Disclosure Authorized Popular Anger The Economics of the Arab Spring and Its Aftermath Public Disclosure Authorized Public Disclosure Authorized Elena Ianchovichina Public Disclosure Authorized Eruptions of Popular Anger Eruptions of Popular Anger The Economics of the Arab Spring and Its Aftermath Elena Ianchovichina © 2018 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 21 20 19 18 This work is a product of the staff of The World Bank with external contributions. The findings, interpreta- tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Translations of the words on the posters: “a decent living” (left); “justice” (right). Cover design: Bill Pragluski, Critical Stages. Library of Congress Cataloging-in-Publication Data has been requested. MENA Development Report Series This series features major development reports from the Middle East and North Africa region of the World Bank, based on new research and thor- oughly peer-reviewed analysis. Each report aims to enrich the debate on the main development challenges and opportunities the region faces as it strives to meet the evolving needs of its people. Titles in the MENA Development Report Series Privilege-Resistant Policies in the Middle East and North Africa: Measurement and Operational Implications (2018) by Syed Akhtar Mahmood and Meriem Ait Ali Slimane Eruptions of Popular Anger: The Economics of the Arab Spring and Its Aftermath (2018) by Elena Ianchovichina Beyond Scarcity: Water Security in the Middle East and North Africa (2018) by World Bank Jobs or Privileges: Unleashing the Employment Potential of the Middle East and North Africa (2015) by Marc Schiffbauer, Abdoulaye Sy, Sahar Hussain, Hania Sahnoun, and Philip Keefer The Road Traveled: Dubai’s Journey towards Improving Private Education: A World Bank Review (2014) by Simon Thacker and Ernesto Cuadra Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa (2013) by Joana Silva, Victoria Levin, and Matteo Morgandi Opening Doors: Gender Equality and Development in the Middle East and North Africa (2013) by World Bank vi Eruptions of Popular Anger: The Economics of the Arab Spring and Its Aftermath From Political to Economic Awakening in the Arab World: The Path of Economic Integration (2013) by Jean-Pierre Chauffour Adaptation to a Changing Climate in the Arab Countries: A Case for Adaptation Governance and Leadership in Building Climate Resilience (2012) by Dorte Verner Renewable Energy Desalination: An Emerging Solution to Close the Water Gap in the Middle East and North Africa (2012) by World Bank Poor Places, Thriving People: How the Middle East and North Africa Can Rise Above Spatial Disparities (2011) by World Bank Financial Access and Stability: A Road Map for the Middle East and North Africa (2011) by Roberto R. Rocha, Zsofia Arvai, and Subika Farazi From Privilege to Competition: Unlocking Private-Led Growth in the Middle East and North Africa (2009) by World Bank The Road Not Traveled: Education Reform in the Middle East and North Africa (2008) by World Bank Making the Most of Scarcity: Accountability for Better Water Management Results in the Middle East and North Africa (2007) by World Bank Gender and Development in the Middle East and North Africa: Women in the Public Sphere (2004) by World Bank Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract (2004) by World Bank Better Governance for Development in the Middle East and North Africa: Enhancing Inclusiveness and Accountability (2003) by World Bank Trade, Investment and Development in the Middle East and North Africa: Engaging with the World (2003) by World Bank All books in the MENA Development Report series are avail- able for free at https://openknowledge.worldbank.org/handle /10986/2168. Contents Acknowledgments xiii About the Author and Contributors xv Abbreviations xix Overview 1 Three Puzzles 7 Summary of Findings 11 PART 1 The “Arab Inequality” Puzzle 23 1 Economic Inequality: Measurement and Biases 27 Introduction 27 Income Inequality 28 Wealth Inequality 33 2 Welfare Dynamics: Definitions and Measurement 41 Introduction 41 Defining the Middle Class 42 Synthetic Panel Method 46 Welfare Dynamics 49 PART 2 The “Unhappy Development” Syndrome 59 3 Dissatisfaction with Life: Subjective Data Analysis 63 Introduction 63 Subjective Well-Being versus Monetary Welfare Measures 63 Measuring Life Satisfaction 65 Dissatisfaction with Life in Arab Countries 66 viii Eruptions of Popular Anger: The Economics of the Arab Spring and Its Aftermath 4 Subjective Well-Being Dynamics 79 Introduction 79 Objective and Subjective Well-Being: Mixed Evidence 79 Subjective Well-Being Dynamics with Synthetic Panels 85 5 Symptoms of a Broken Social Contract 93 Introduction 93 A Broken Social Contract 93 Major Grievances behind the Arab Unhappiness 100 PART 3 The Paradox of “Political Violence in Middle-Income Countries” 113 6 Arab Spring Protestors and Protests 117 Introduction 117 The Profile of Arab Spring Protestors 117 Arab Spring Protests and Riots 120 7 The Aftermath of the Arab Spring 127 Introduction 127 State Responses to the Arab Spring 128 Foreign Interventions, Identity-Based Polarization, and High-Intensity Civil Wars 131 Overlapping Horizontal Divisions 135 What Explains the Arab Paradox of “Political Violence in Middle-Income Countries”? 138 8 Development Consequences and Policy Implications 145 Development Consequences 145 Toward a New Social Contract and Governance Model 149 Box 2.1 Assumptions Underpinning the Synthetic Panel Approach 48 Figures O.1 Political Instability Index, 2003–12 2 O.2 Annual Economic Output Growth, 2005–10 3 O.3 Poverty Rates 3 O.4 Expenditure Inequality, over Time and across the World 4 O.5 Shared Prosperity 4 O.6 Profile of the Arab Spring Protestors 5 O.7 Reasons for Arab Spring Based on Views in Developing MENA 8 Contents ix O.8 Dissatisfaction with Government Services in Arab Spring Countries 8 O.9 Reversal of Fortunes in Developing MENA 15 O.10 Institutional Quality in Arab Economies, 2010 16 P1.1 Inequality, over Time and across the World 24 1.1 The Arab Region’s Development Context 29 1.2 Comparisons of Expenditure Inequality in Developing MENA 30 1.3 Inequality in Subjective Well-Being, 2006–09 33 1.4 Wealth Concentrated in the Hands of Billionaires 34 1.5 Offshore Bank Deposits in Tax Havens 36 2.1 Pre–Arab Spring Welfare Dynamics across Income