This document discusses three questions: 1) Is democracy important for development, especially in oil-dependent regions? 2) Why has the Arab Spring been a "late awakening"? 3) Why has the Arab Spring been so violent? Regarding the first question, the literature suggests democracy promotes development by increasing stability, equitable societies, and human capital investment. However, in socially and ethnically polarized regions like the Arab world, inclusive democracy is important to manage tensions. For the second question, the Arab world has experienced high persistence of autocracy and few democratic transitions due to factors like oil rents, conflicts, and country-specific determinants. For the third question, the violence is partly explained by social polarization and autocrats choosing repression over

1. Democracy and Economic Development
ERF 21st Annual Conference
Gammarth, Tunisia
March 20-22, 2015

2. The Arab Spring: Much Violence,
Little Democracy
Ibrahim Elbadawi
Dubai Economic Council and ERF
Democracy and Economic Development
ERF 21st Annual Conference
Gammarth, Tunisia, March 20-22, 2015

3. Motivation
 Three Fundamental Questions
 Is Democracy important for Development,
especially in oil-dependent MENA?
 If so, why has the “Arab Spring” been such a
“late awakening”?
 And, why has it been so violent?
 Two cross-cutting themes
 Resource-dependency
 Social polarization

4. Three Fundamental Questions
√ Is Democracy important for
Development?
(oil-dependent MENA)

5. Is Democracy Important for Development:
The Received literature
 The received literature (e.g. Barro, 1996; Rodrik,
1997; Rodrik and Wacziarg, 2005 …etc. ) suggests
that Democracies:
 Yield long-run growth rates that are more
predictable
 Produce greater stability in economic performance
 Handle adverse shocks much better
 Pay higher wages
 Generate more investment in human capital –
health and education
 Produce more equitable societies

6. Is Democracy Important for Development:
Managing Natural Resources
 The received (second generation) Growth Literature
on Oil and other point-source Minerals (Collier and
Goderis, 2007)
 The curse is real but conditional on bad political governance
 It is a long-term phenomenon
 Economic factors: channels rather than true causes
 More recent (third generation: Elbadawi and Soto,
2012)
 Account for country heterogeneity and cross-dependency
 Unpack political institutions: inclusiveness & credibility
 Generate country-specific rents effects and institutional mitigation
potential
 Endogenously derive the country resource-management trajectory

7. Managing Natural Resources: Benchmark
Results (Elbadawi and Soto, 2012)
Table 1
Econometric Results: Long-Run Growth Determinants
Variable (1) (2) (3) (4) (5)
Resource Rents
(as % of GDP)
-
-0.049*
(0.030)
-0.032
(0.031)
-0.029
(0.031)
-0.033
(0.031)
Checks and Balances
(polity index)
- -
0.028***
(0.008)
-
0.025***
(0.008)
Democracy
(index)
- - -
0.275**
(0.088)
0.181*
(0.094)
Constant
0.108***
(0.041)
0.126***
(0.041)
0.129***
(0.042)
0.192***
(0.044)
0.252***
(0.046)
Note: Number of countries=90, number of observations=2745, maximum number of
instruments=605, time and country fixed effects included.

8. Managing Natural Resources: Heterogeneity
and Sub-groups (Elbadawi & Soto)

9. Managing Natural Resources: Typology of
NR Management Experiences (Elbadawi & Soto)
Political
Regimes
High
Inclusiveness
(political
democracy)
Low
Inclusiveness
(political
democracy)
High commitment
(checks and
balances)
Use resource rents to
diversify and grow
(Australia, New Zealand)
May avoid curse and
use rents to grow but
political transition
remains a challenge
(China, SGP, HKG,
MYS)
Low commitment
(checks and
balances)
May Experience curse
(Greece, Latin American
countries)
Experience curse
(Populous Arab oil,
Resource-dependent
SSA)

10. Is Democracy Important for Development:
Managing Social Fractionalization
 Non-factional inclusive democracy is better in
managing social fractionalization
 Programmatic authoritarian regimes are not likely to
survive in socially fractionalized societies:
 The insight from “Can Africa Claim the 21st Century” Report:
Uganda vs Tanzania
 The Baath Parties: Syria, Iraq
 Likely to be captured by sub-national interests
 Like SSA, most Arab societies are highly
fractionalized (Figures)
 The Asian development model is not likely to be
transferrable to the Arab world or SSA

11. Social Fractionalization in the Arab world
(Elbadawi, 2004)
Figure 3: Dominant Social Fractionalization by Country
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
Yemen
Tunisia
Libya
Saudi
Egypt
Oman
UAE
Qatar
Algeria
World
Kuwait
Morocco
Iraq
Syria
Bahrain
Jordan
Mauritania
Sudan
Lebanon
Djibouti
Somalia
SocialFractionalization
Ethnicity Language Religion

12. Social Polarization in the Arab world
(Elbadawi, 2004)
Figure 4: Dominant Social Polarization by Country
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Yemen
Tunisia
Libya
Saudi
Arabia
Egypt
Oman
UAE
Lebanon
Somalia
Qatar
Syria
World
Algeria
Sudan
Djibouti
Bahrain
Jordan
Iraq
Mauritania
Morocco
Kuwait
SocialPolarization
Ethnicity Language Religion

13. Is Democracy Important for Development:
Lessons for the Arab Spring
 Lesson 1: “…For every Lee Kuan Yew of Singapore, there are
many like Mobutu Sese Seko of the Congo” (Dani Rodrik, 2010)
 Lesson 2: Arab spring should not only bring democracy, as
badly needed as it is in this region, but should also lay the
foundations for strong systems of political checks and balances
 Lesson 3: Programmatic benevolent authoritarianism has been,
and will likely be, an exception to the rule in the socially
fractionalized Arab world; hence democracy is central to the
survival of the nation state in this region, but factional, winner
take all, democracy is not the answer

14. Three Fundamental Questions
√ Why has the “Arab Spring”
been such a “late awakening”?

15. Why has the “Arab Spring” been such a “late
awakening”?
 The Arab Spring is a late “awakening”
 High persistence of autocracy in the Arab
world (Figure)
 Accumulated effect of lack of “sustainable
democratic transitions” (Figure)
 Modelling “sustainable democratic transitions”
 Deconstructing democratic transition in the
Arab world (Elbadawi, Makdisi and others)
 Key factors: oil rents and conflicts, but also
idiosyncretic country-specific determinants

16. Table 1: Democracy across the Developing World
{-10 (extreme autocracy) to +10 (full-fledged democracy)}
(Elbadawi& Makdisi, 2013)
1960-64 1965-69 1970-74 1975-80 1981-84 1985-90 1991-94 1995-99 2000-04 2005-09
Arab -7 -7 -8.35 -8.4 -8.2 -8 -7.4 -7 -6.7 -4
Sub-SaharanAfrica -6 -6.6 -7 -7 -7 -7 -5.4 -1.5 0 2.5
LatinAmerica -1.7 -2.6 -6 -6 -4 3 6 7 8 8
SouthernCentralAsia -9.4 -8 -8 -7.4 -6 -5.7 -3 -3.8 -5.2 -2.25
EastAsia -6 -6.4 -4.8 -7 -7 -2 2.5 1.4 4.125 2.25

17. Figure 2: Frequency of Democratic
Transitions in Developing Regions:1960-09
(Elbadawi& Makdisi, 2013)
79
52
41
13
7
0
10
20
30
40
50
60
70
80
90
Latin America Sub-Saharan Africa East Asia Southern Central Asia Arab

18. Modeling Democratic Transitions (an extended
Przeworski- Ross Model): cannot reject the
following selected set of hypotheses
 H1: Controlling for initial income, growth and democratic legacy,
natural resource rents hinders democratic transition
 H2: However, the resource rents impact on democratic
transition is subject to threshold effects (i.e. below a certain
threshold, resource rents have no impact)
 H3: Wars impede democratic transitions (Table)
 H4: high unemployment, beyond a certain threshold (U>10),
promotes democratic transitions
 H5: However, employment does not fully account for the
authoritarian bargain in highly resource endowed societies:
 Unlike lower levels, high resource rents remain negative and highly
significant, despite controlling unemployment
 The authoritarian bargain still holds, possibly through other means
of social transfers

19. Table 2: Average Number of Wars
Arab world second only to SSA
1960-69 1970-79 1980-89 1990-99 Average
Arab
Homewar 4.5 5.5 5.5 5 5.1
Neighbor war 6.5 10 9 10.5 9.0
Sub-Saharan Africa
Homewar 2 6.5 8 9 6.4
Neighbor war 10.5 18 22.5 22 18.3
Latin America
Homewar 2.5 3 5.5 4 3.8
Neighbor war 5 7 14 12 9.5
Southern Central Asia
Homewar 1.5 2 3 3 2.4
Neighbor war 2.5 2.5 3 4 3.0
East Asia
Homewar 2 3 5 3.5 3.4
Neighbor war 2 5.5 6.5 6.5 5.1

20. Hypotheses (cond:).
Democratic Neighborhood
 H6: Neighborhood democracy promotes democratic
transitions
 H7: Moreover, resource rent is not a constraint to
democratic transition in democratic neighborhood
 H8: Neighborhood wars impede democratic
transitions
 Implications of the Arab-Israeli conflict
 Other inter-state conflicts- Gulf wars
 Potential ramifications of the Arab Spring
 H9: Moreover, resource rents remain impediment to
democratic transition in war-affected neighborhoods

21. Figure 6: Neighborhood Democracy
(Average level of Democracy in the immediate Neighbors)
-7 -7
2.95
-8.1
-3.5
0.33
2
8
-6.5
3.08
-10
-8
-6
-4
-2
0
2
4
6
8
10
Arab Sub-Saharan Africa Latin America Southern Central
Asia
East Asia
1960-64
2005-09

22. Three Fundamental Questions
√ Why has the “Arab Spring”
been so violent?

23. Why has the “Arab Spring” been so violent: Peoples
Power and Autocracy (Andrea Kendall-Taylor and Erica
Frantz, April 9, 2014: The Washington Post)_
 Since the turn of the 2000 decade autocrats are now ousted more by popular
uprisings than by coups
 However, they are learning and mounting counter-revolutions through “induced
violence (El-Affendi, 2013)

24. Why has the “Arab Spring” been so violent:
assessing the magnitude
 Political violence has been specially intensive
during and after the onset of the Arab Spring
 300,000 casualties in Syria alone
 More than 10 million refugees and internally
displaced Syrians
 Economy: $202 b lost to the war
(http://www.unrwa.org/sites/default/files/alienation_a
nd_violence_impact_of_the_syria_crisis_in_2014_e
ng.pdf)

25. Much Violence, Little Democracy
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
0
20
40
60
80
100
120
MedianPolity
Battle-RelatedDeaths(permillionpopulation)
Arab Casualties Non-Arab Casualties Median Arab Polity
Gulf War
Sudan and Iraq
Civil War
Invasion
of Iraq
Arab
Spring
Source: WDI (World Bank) and Uppsala Conflict Data Program (Uppsala University Version 5.0)

26. Civilian Victims by Country (Monthly data)
0
200
400
600
800
1000
1200
1400
1600
1/11
3/11
5/11
7/11
9/11
11/11
1/12
3/12
5/12
7/12
9/12
11/12
1/13
3/13
5/13
7/13
9/13
11/13
1/14
3/14
5/14
7/14
9/14
11/14
1/15
InternalConflictCivilianDeaths
Libya
Sudan
Egypt
Tunisia
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1/11
3/11
5/11
7/11
9/11
11/11
1/12
3/12
5/12
7/12
9/12
11/12
1/13
3/13
5/13
7/13
9/13
11/13
1/14
3/14
5/14
7/14
9/14
11/14
1/15
InternalConflictCivilianDeaths
Syria
Source: Armed Conflict Project and Event Data Project (ACLED)
Source: The Syrian Revolution Martyr Database

27. Why has the “Arab Spring” been so violent:
The Received Literature
 No role for natural resources or social structures in mainstream
political transition literature:
 Modernization strand (Lipset, 1959, Barro, 2012)
 Intuitional school (Acemoglu and Robinson, 2001, 2006)
 Extension: Incumbent strategy for pre-empting a revolt largely
driven by the size of rents pc (Ali and Elbadawi, 2012; Diwan, 2014):
 High rents, beyond a certain rents pc threshold: investment in
public goods, expanding public sector employment and social
transfers
 Low and moderate rents pc: political repression and violence as the
dominant strategy
 However, while accounting for natural resource effect, this
literature does not consider social structures in resource
endowed societies

28. Resource Rents pc: GCC vs Populous Oil
Arab Economies (2005 fixed dollars)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
MedianOilRentsperCapita
(constant2005USD)
GCC - Nationals only
-
50
100
150
200
250
300
350
400
MedianOilRentsperCapita
(constant2005USD)
Populous Arab-Oil
Source: WDI (World Bank)
Source: WDI (World Bank)

29. Why has the “Arab Spring” been so violent:
The Received Literature (contd.)
 Hodler (2012) fills this lacuna: an incumbent autocrat had two
options to prevent democratization in a socially polarized
society, depending on:
 The extent of resource endowment
 Whether he belongs to an ethnic minority or majority group
 Major predictions:
 In highly resource endowed societies, equilibrium behavior of an
autocrat form the majority group would be to ‘bribe’ all citizens in
order to remain in power
 Instead, if the dictator controls only intermediate or low level of
appropriable resources, he will have no option but to relatively
peacefully extend the franchise (Egypt, Tunisia)
 On the other hand, the violent option will be preferred by a dictator hailing
from the minority group, because it is cheaper to bribe his group to fight to
keep him in power than to bribe both groups (Libya, Syria)

30. Why has the “Arab Spring” been so violent:
Toward a Research Agenda
 Extend Hodler’s type model so that it is even more relevant to
explaining the violence associated with the Arab Spring:
 First, relax the implicit assumption of the ‘winners take all’
democratization
 Second, the effect of conflictive and polarized neighborhood (such
as the rising sectarian divide in the region) and the consequent
external interventions spawned by it
 Third, group cohesion as an alternative approach to understanding
why ethnic minority-led regimes were capable of mounting extreme
violence in response to popular democratic demands
 Test predictions of the theoretical literature:
 New panel data on popular uprisings and violence
 However, not yet extended to more recent years

31. References
 Acemoglu, Daron, and James A. Robinson. 2006. Economic Origins of Dictatorship and Democracy. New
York: Cambridge University Press.
 Acemoglu, Daron, and James A. Robinson. 2001. “A Theory of Political Transitions.” American Economic
Review, 91 (4): 938-963.
 Ali, Omer and Ibrahim Elbadawi (2012),” The Political Economy of Public Sector Employment in Resource
Dependent Countries,” ERF Working Paper # 673, the Economic Research Forum, Cairo, Egypt.
 Barro, Robert, (2012), “Convergence and Modernization Revisited”, Working Paper 18295, National Bureau
of Economic Research, Cambridge, MA 02138.
 Barro, Robert (1996), “Determinants of Economic Growth: A Cross-Country Empirical Study,” NBER
Working Paper no. 5698, August.
 Collier, P. and B. Goderis. (2007), “Commodity Prices, Growth, and the Natural Resource Curse:
Reconciling a Conundrum,” CSAE Working Paper WPD/2007-15, Department of Economics, University of
Oxford.
 Diwan, Ishac (2014),”The Effects of Oil on Development and the Uncertain Rise of the GCC,” unpublished
mimeo, ERF, Cairo.
 El-Affendi, Abdelwahab (2015),” Overcoming Induced Insecurities: Stabilizing Arab Democracies after the
Spring,” unpublished mimeo, Project on Deconstructing Arab Democratic Transitions, American University
of Beirut.

32. References (cond.)
 Elbadawi, Ibrahim (2015),”Deconstructing Democratic Transitions in the Arab World,” unpublished mimeo,
Project on Deconstructing Arab Democratic Transitions, American University of Beirut.
 Elbadawi, Ibrahim and Raimundo Soto (2012),” Economic Growth During the Oil Cycle,” ERF Working
Paper # 678, the Economic Research Forum, Cairo, Egypt.
 Elbadawi, Ibrahim (2004),” The politics of Sustaining Growth in the Arab World: Getting Democracy Right,”
Lecture and Working Papers Series No. 2, Institute of Financial Economics, AUB, Beirut, Lebanon.
 Geddes, Barbara et al (2015), “New Data Set: Autocratic Breakdown and Regime Transitions,” unpublished
mimeo, Department of Political Science UCLA Los Angeles, CA, USA.
 Hodler, Ronald (2012),”The Political Economics of the Arab Spring,” OxCarre Research Paper 101,
Department of Economics, Oxford Centre for the Analysis of Resource Rich Economies, Oxford University,
UK.
 Lipset, S., (1959), “Some Social Pre-requisites of Democracy: and Economic Development and Political
Legitimacy”, American Political Science Review 53.
 Rodrik, Dani (2010), “The Myth of Authoritarian Growth,” Project Syndicate, The World Opinion Page,
August.
 Rodrik, Dani (1997), “Democracy and Economic Performance,” presented at the conference on
democratization and economic reform in South Africa, Cape Town, January, 16-19.
 Rodrik, Dani and Romain Wacziarg (2005), “Do Democratic Transitions Produce Bad Economic Outcomes,”
CDDRL Working Paper, Center on Democracy, Development and the Rule of Law, Stanford Institute of
International Studies, Stanford University, CA, USA.

33. Democracy and Economic Development
ERF 21st Annual Conference
Gammarth, Tunisia
March 20-22, 2015