Role of middle class as the main drivers of new Arab development model

Engaging the middle class in reshaping a future is the only sustainable way forward for the Arab region, highlighted the Arab Middle Class Report titled “Arab Middle Class: Measurement and Role in Driving Change”.

For decades, the Arab development model has thrust upon generous public services and subsidies in exchange for little or no public policy accountability.  However, this “authoritarian bargain” came with an expiration date. It began in the 1990s with the onset of economic structural adjustment programmes. Across the region, particularly in oil-poor economies, governments adopted economic reforms in the face of mounting financial pressures. Middle-class people, constituting nearly half of the Arab population, bore the brunt of the pain—with few compensating benefits—as subsidies and public expenditures were slashed. The number of jobs guaranteed to young graduates diminished and the quality of the public services deteriorated. Flourishing patronage networks favoured some groups over others, undercutting social cohesion and encouraging significant disparities. The educated middle class people realized that their political and social systems were lacking. Frustrations finally boiled over in 2011.

The “Arab Spring” began with great hopes for the middle class. However, the consequences have been far from aspirations. In some countries, conflict has wiped out decades of development gains. For example, the economic cost of the unrest in the Syrian Arab Republic alone was estimated to have reached $140 billion by the end of 2013. Including losses incurred by Egypt, Libya and Yemen could bring the regional cost to double that amount. Factoring in the human cost and long-term implications, the situation is even more dire. Not only do they destabilize the middle class in the short-term, but they also undercut its innate capacity to steer transition in more productive directions and to moderate destructive social elements. The region’s longstanding governance gap complicates the situation; there is a legacy of institutions badly equipped for easing tensions, fostering social consensus and driving development.

Given the backdrop of the geo-political and socio-economic challenges of the Arab region, this report highlights the essential moderating role of middle class citizens as the main drivers of successful development experiences, the backbone of democracy and the market economy, and a force for social cohesion and political stability. The report introduces distinct and novel technical approaches in understanding the dynamics of the size of middle class, and then sets outs methods for sustaining, empowering and enlarging the middle class.

This report argues that a new model should unite the middle class with the poor and vulnerable in a grand democratic alliance, with a clear and pragmatic agenda. The slogan “subsidies for the poor and decent jobs for the middle class” provides a starting point for this transformation. An overriding aim should be to prevent members of the middle class from slipping into poverty, while expanding the middle class by upwardly mobilizing the poor and vulnerable.

No single set of policies can be applied across all Arab countries, but none of the changes proposed in this report can succeed without political reform. A brighter future for the Arab region depends on a governance revolution to undo the old authoritarian bargain.