Achievements and Deficits of the Arab MENA Economies on the Eve of the Current Global Corona Crisis

Solomon, Hussein; Tausch, Arno

Our exercise of standard development accounting attempts to arrive at a synthesis of the performance of Arab countries as they approach the abyss of the impending global economic recession and health crisis, connected with the Corona (Covid-19) pandemic. The choice of our indicators was guided by world system (Frank, ReOrient: Global economy in the Asian Age Ewing, University of California Press, 1998) and dependency approaches to development (Bornschier et al., Transnational corporations and underdevelopment. Frederic Praeger, New York, 1985); by later globalization-oriented debates about development (Tausch, Int J Heal Plan Manag 27(1):2–33, 2012a; Tausch, International macroquantitative data. Faculty of Economics, Corvinus University of Budapest. Available at http://www.uni-corvinus.hu/index.php?id=47854&tx_ttnews%5Btt_news%5D=0&tx_ttnews%5BbackPid%5D=31638&tx_ttnews%5BcalendarYear%5D=2012&tx_ttnews%5BcalendarMonth%5D=6&cHash=af8ef6888f7c9922b83b113f71c1ca32, 2012b; Tausch, Int Soc Sci J 68(227–228):79–99. DOI: 10.1111/issj.12190, 2018); and by indicators featuring internal, “home-made” restrictions on democracy and gender equality. The choice of our indicators was also guided by research on Islamism, and the issues of the way, religion, culture and values are structured in the region (Grinin et al. 2020). Our data support the perspective of the UNDP Arab Human Development Report (UNDP, Arab Human development report 2016: Youth and the prospects for human development in a changing reality. UNDP, New York. Available at http://hdr.undp.org/en/content/arab-human-development-report-2016-youth-and-prospects-human-development-changing-reality, 2016) which diagnosed that, deficient as it may be, the state-led development model in the Arab world has expanded access to key entitlements and raised some levels of human development. Arab countries had a relatively low incidence of poverty and income inequality, shielding disadvantaged groups from some of the worst economic pressures of our times. On all accounts of standard development accounting (Grinin et al., Economic cycles, crises, and the global periphery, Springer, Cham, 2016; Tausch, Int Soc Sci J 61(202):467–488, 2010; Tausch and Heshmati, Globalization, the human condition and sustainable development in the twenty-first century: Cross-national perspectives and European implications. Anthem Press, London/New York/Delhi. https://www.scopus.com/inward/record.uri?eid=2-s2.0-84939789242&doi=10.7135%2fUPO9780857286550&partnerID=40&md5=32618c3ba9b7101853ea357f86de2703. 10.7135/UPO9780857286550, 2012a; Tausch and Heshmati, Sociologia 44(3):314–347, 2012b), the performance of the Arab countries since the 1960s was mixed at best. The multivariate indicator analysis of the development performance of the countries in the world system along seven different dimensions: Democracy. Economic growth. Environment. Gender. Human development. R&D. Social cohesion; showed that the global ranks of the Arab countries in this international comparison combining democracy, economic growth, environment, gender, human development, R&D and social cohesion ranged from rank 67 – Tunisia – to rank 167 – Sudan. Our analysis of poverty gaps in the MENA region indicates that poverty gaps exhibit two trends in the region – a secular, long-run setback and decrease of the poverty gaps, measured by the three well-known World Bank purchasing power (PPP) benchmarks of 1.90$, 3.20$, 5.50$ a day, and a lamentable short-run setback and increase of the poverty gaps during the neo-liberal transformations of the 1990s and in the wake of the Arab Spring. These setbacks in the 1990s and in the wake of the Arab Spring surely coincide with the statistics of unemployment, which closely correlates with the downswings in the economic cycle. This is especially true for the rates of youth unemployment, which reaches a staggering quarter of the entire age group. Based on the extensive development accounting data collection contained in Tausch, 2019, we also arrive in this chapter at the following and rather depressing analysis of the development deficits of the Arab world: youth disempowerment, deficits in education, high unemployment and precarious jobs, the exclusion of young women, substantial health challenges, violent radicalization, patriarchy, low social and religious tolerance, inequality of opportunity in education, the challenges facing women, the effects of social and political conservatism, problems in the health sector, war and violent conflict, a high migration pressure, the flight of human capital, all these phenomena, mentioned by the UNDP Arab Human Development Report, 2016. With the data of Barro and Ursua (Barro-Ursua macroeconomic data. Available at https://scholar.harvard.edu/barro/publications/barro-ursua-macroeconomic-data, 2011), and Barro et al. (The Coronavirus and the Great Influenza epidemic – Lessons from the ‘Spanish Flu’ for the Coronavirus’s potential effects on mortality and economic activity (2020). CESifo Working Paper No. 8166. Available at SSRN: https://ssrn.com/abstract=3556305, 2020), as well as Grinin et al. (Economic cycles, crises, and the global periphery. Springer, Cham, 2016), we deal in this chapter also with the comparative aspects and what economic science knows about the effects of both the Spanish Influenza pandemic from 1918 onwards and the Great Depression from 1929 onwards. Poor countries like Egypt recovered their income levels from pre-Great Depression levels only in the late 1950s. Based on the empirical relationship between income levels and pandemic fatality rates 1918–1920, we can assume that if the current pandemic repeats the patterns of the Spanish influenza, 1918–1920, fatality rates in the Arab world will be 1–2 percent in the United Arab Emirates, Jordan, Egypt, Tunisia, Kuwait, Morocco and >2 percent in Qatar, Yemen , Sudan, Mauritania and Comoros. Finally, we risk a prognosis on the overall societal effects of the pandemic. There will be rising income inequality over time. And the severity of the epidemic negatively influences international income convergence over time. With the majority of the populations in the Arab world predictably becoming poorer still by international standards after the pandemic, and with income inequality predictably rising, we should finally look at another lesson of history, which might be deduced from the Barro and Ursua (Barro-Ursua macroeconomic data. Available at https://scholar.harvard.edu/barro/publications/barro-ursua-macroeconomic-data, 2011) data. In the United Kingdom, it took practically a decade to recover the pre-pandemic income levels, and in Italy, the crisis was even more severe, and Italian democracy collapsed and Benito Mussolini rose to power in 1922.