During the 2000s, expenditure inequality in Arab countries was low or moderate and, in many cases, declining. Different measures of wealth inequality were also lower than elsewhere. Yet, there were revolutions in four countries and protests in several others. We explain this so-called “inequality puzzle” by first noting that, despite favorable income inequality measures, subjective well-being measures in Arab countries were relatively low and falling sharply, especially for the middle class, and in the countries where the uprisings were most intense. The increasing unhappiness, reflected in perceptions of declining standards of living, was associated with dissatisfaction with the quality of public services, the shortage of formal-sector jobs, and corruption. These sources of dissatisfaction suggest that the old social contract, where government provided jobs, free education and health, and subsidized food and fuel, in return for the subdued voice of the population, was broken. The Arab Spring and its aftermath indicates the need for a new social contract, one where government promotes private-sector jobs and accountability in service delivery, and citizens are active participants in the economy and society.

Eruptions of Popular Anger: The Economics of the Arab Spring and Its Aftermath sets out to answer three puzzles—the “Arab inequality†? puzzle of civil uprisings in countries with low-to-moderate and stagnant economic inequality, the “unhappy development†? paradox of increasing dissatisfaction at a time of moderate-to-rapid development, and the paradox of political violence in middle-income countries. The book’s empirical investigation rules out high and rising inequality as a reason for the Arab Spring uprisings. It shows that the real problem was the erosion in middle-class incomes and the growing dissatisfaction with the quality of life, the shortage of formal sector jobs, and corruption. Frustration was particularly high among the young, educated, middle-class residents in urban areas. The old social contract, which had delivered development results in the past and under which Arab governments provided public-sector jobs and subsidized services in return for subdued voice, was unsustainable and malfunctioning. The public sector could no longer be the employer of choice, but the private sector did not generate enough formal sector jobs, because of distortions that constrained its growth and policies that offered advantages to a few firms with political connections, limiting competition and private investment. The breakdown in the social contract increased the premium on freedom and created impetus for political change. This report shows that the Arab Spring revolutions and the subsequent spread of violence and civil wars in the post†“Arab Spring Middle East and North Africa region can be traced to the broken social contract, institutional weaknesses, and regional divisions in societies polarized along ethnic and sectarian lines. The Arab Spring and its aftermath indicate the need for a new social contract under which governments promote private-sector job creation, design public services in a way that holds providers accountable to beneficiaries, and promote inclusion and good governance.

The Summer 2017 issue of the IMF Research Bulletin highlights new research such as recent IMF Working Papers and Staff Discussion Notes. The Research Summaries are “Structural Reform Packages, Sequencing, and the Informal Economy (by Zsuzsa Munkacsi and Magnus Saxegaard) and “A Broken Social Contract, Not High Inequality Led to the Arab Spring” (by Shantayanan Devarajan and Elena Ianchovichina). The Q&A section features “Seven Questions on Fintech” (by Tommaso Mancini-Griffoli). The Bulletin also includes information on recommended titles from IMF Publications and the latest articles from the IMF Economic Review.

Sub-Saharan Africa has achieved significant gains in reducing the levels of extreme poverty in recent decades, yet the region continues to experience challenges across the development indicators, including energy access, literacy, delivery of services and goods, and jobs skills, as well as low levels of foreign direct investment. Exacerbating the difficulties faced by many countries are the sequelae of conflict, such as internal displacement and refugee migration. Social Contracts for Development: Bargaining, Contention, and Social Inclusion in Sub-Saharan Africa builds on recent World Bank attention to the real-life social and political economy factors that underlie the power dynamic and determine the selection and implementation of policies. Applying a social contract approach to development policy, the authors provide a framework and proposals on how to measure such a framework to strengthen policy and operational engagements in the region. The key message is that Africa’s progress toward shared prosperity requires looking beyond technical policies to understand how the power dynamics and citizen-state relations shape the menu of implementable reforms. A social contract lens can help diagnose constraints, explain outbreaks of unrest, and identify opportunities for improving outcomes. Social contract assessments can leverage the research on the nexus of politics, power relations, and development outcomes, while bringing into focus the instruments that underpin state-society relations and foster citizen voice. Social contracts also speak directly to many contemporary development trends, such as the policy-implementation gap, the diagnostic of binding constraints to development, fragility and conflict, taxation and service delivery, and social protection. The authors argue that policies that reflect the demands and expectations of the people lead to more stable and equitable outcomes than those that do not. Their focus is on how social contracts are forged in the region, how they change and why, and how a better understanding of social contracts can inform reform efforts. The analysis includes the additional impact of the COVID-19 (coronavirus) pandemic on government-citizen relationships.

Taking apart the ideology of the "middle class" Tidings of a shrinking middle class in one part of the world and its expansion in another absorb our attention, but seldom do we question the category itself. We Have Never Been Middle Class proposes that the middle class is an ideology. Tracing this ideology up to the age of financialization, it exposes the fallacy in the belief that we can all ascend or descend as a result of our aspirational and precautionary investments in property and education. Ethnographic accounts from Germany, Israel, the USA and elsewhere illustrate how this belief orients us, in our private lives as much as in our politics, toward accumulation-enhancing yet self-undermining goals. This original meshing of anthropology and critical theory elucidates capitalism by way of its archetypal actors.

This Handbook captures the salient features of Middle Eastern economies and critically examines the public policy responses required to address the challenges and opportunities across the region. Bringing together wide-ranging perspectives from carefully selected and renowned subject specialists, the collection fills a gap in this relatively young and growing academic field. Combining discussion of theory and empirical evidence, the book maps out the evolution of Middle East economics as a field within area studies and applied development economics. Presented in six thematic sections, the book enables the reader to gain a comprehensive understanding of the region’s main economic themes and issues: • Growth and development in comparative perspectives • Labour force and human development • Natural resources, resource curse and trade • Poverty, inequality and social policy • Institutions and transition to democracy • Corruption, conflict and refugees Providing an overview of the principal economic problems, policies and performances relating to the countries in the Middle East and North Africa region, this collection will be a key resource for upper-level undergraduates, graduates and scholars with an interest in Middle East economics, applied development economics, development studies and area studies.

Inside Inequality in the Arab Republic of Egypt: Facts and Perceptions Across People, Time, and Space comprises four papers prepared in the framework of the Egypt inequality study financed by the World Bank. The first paper, by Sherine Al-Shawarby, reviews the studies on inequality in Egypt since the 1950s with the double objective of illustrating the importance attributed to inequality through time and of presenting and compare the main published statistics on inequality. The second paper, by Branko Milanovic, turns to the global and spatial dimensions of inequality. The Egyptian society remains deeply divided across space and in terms of welfare, and this study unveils some of the hidden features of this inequality. The third paper, by Paolo Verme, studies facts and perceptions of inequality during the 2000-2009 period, which preceded the Egyptian revolution. The fourth paper, by Sahar El Tawila, May Gadallah, and Enas Ali A.El-Majeed, assesses the state of poverty and inequality among the poorest villages of Egypt. The paper attempts to explain the level of inequality in an effort to disentangle those factors that derive from household abilities from those factors that derive from local opportunities. Inside Inequality in the Arab Republic of Egypt provides some initial elements that could explain the apparent mismatch between inequality measured with household surveys and inequality aversion measured by values surveys. This is a particularly important and timely topic to address in light of the unfolding developments in the Arab region. The book should be of interest to any observer of the political and economic evolution of the Arab region in the past few years and to poverty and inequality specialists interested in a deeper understanding of the distribution of incomes in Egypt and other countries in the Middle East and North Africa region. World Bank Studies are available individually or on standing order. The World Bank Studies series is also available online through the Open Knowledge Repository (https://openknowledge.worldbank.org/) and the World Bank e-Library (www.worldbank.org/elibrary). Book jacket.