In search for a New Development Paradigm (by Abdallah Al Dardari)

In October 2011, in a world economists gathering in New York, I asked Joseph Stiglitz what he thought was the optimal economic policy for Arab countries in transition. His answer was short, crisp, and without hesitation "social market economy". I couldn't help lamenting over the ill fated attempt at going down that road in Syria during 2005-2011, ending with the worst humanitarian crisis of the 21st century. Since then ESCWA has been seriously and diligently engaged in looking at the pre 2011 Arab economic paradigm, in an attempt to understand its failures, shortcomings, and successes. This is an attempt to propose a new developmental framework that is democratic and inclusive and meet the aspirations of Arab streets. Fresh analysis of the Arab middle class and poverty indexing is central to this effort. Very rigorous and thorough household survey data analysis, combined with a multi, and cross dimensional definition of what is a middle class reveals a very interesting narrative of social mobility in Arab society. Combining economics, political economy, and political sociology benchmarking of social strata in the region, reveals and even explains the tremendous pressures for change that were wreaking havoc in Arab societies, without serious attention from decision makers (our next blog will focus on the Arab middle class). Next to understanding the Arab middle class, ESCWA is engaged in a challenging exercise of revisiting poverty. An Arab Multi dimensional Poverty Index is in the works, with the hope that economic and social policies in the near future could be symmetrical with the essential structures and dynamics of poverty, not a mere reaction to superficial symptoms of that challenge. Capturing the poor, the vulnerable and the middle class should serve as the basis for economic policies that put human dignity first. Economic policies of inclusive production and distribution, of decent jobs and human security, of equity and utility maximisation, along with profit maximization should be considered as a package. All of that in a context of regional integration and an east and south bound globalization. Dare I say are we talking about social market economy!!? I recently read Grzegorz W. Kolodko, Poland's former deputy prime minister and lead reformer, talking about the subject. In his words "in the long run a kind of social market system seems the only sensible option for the future of mankind". Instead of lamenting the past, ESCWA is forging ahead towards a sensible economic paradigm for the Arab region and beyond. There is no time to lose.