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(originally published by Booz & Company)


Staying on the Road to Growth

The last 18 months have been characterized by unexpected tests for government and business leaders in the Middle East. It may be tempting to appease the partisans of the “Arab Spring” with subsidies, or to slow down the pace of economic reforms. But if Middle East business and policy leaders are serious about continuing the region’s economic momentum, they will have to resist these temptations. To do so, they will have to resolve five fundamental tensions: stability versus openness, social appeasement versus economic transformation, nationalization versus privatization, untargeted development (leading to exclusion and entitlement) versus inclusive development, and sovereignty versus regionalization. Resolving these paradoxes will take conscious attention to long-term goals, but in a way that has been developing in the region for 20 years. It’s as if the leaders of the MENA countries have been developing their acumen all this time, just to prepare themselves for the challenges of the current moment.

Stability vs. Openness

In the past, many people in the region seemed to fear that economic reforms might lead to instability. According to this view, too much openness to change could be dangerous to the social order. That reflexively cautious attitude, however, has now been proven incorrect. Societies have been evolving at a faster pace than their governing structures, in part thanks to technological advances. As it turns out, the more rigid a country, the more difficult it has been to assimilate social change. By contrast, those places where the government demonstrates flexibility are precisely those least affected by the Arab Spring; they have coped best with the recent turbulence.

Perhaps the most important manifestation of the tension between stability and openness is the way in which governments have engaged their younger citizens. Countries in the Middle East have had mechanisms for dialogue and consultation, but in the past these did not include all groups. Young people, in particular, were left out — even as their numbers swelled and they grew accustomed to new digital technologies that empowered them as communicators. It should thus come as no surprise that the region’s youth have an appetite for community participation and a sense of economic frustration that their parents did not. This is not just a demographic shift; it has a cultural component.

The GCC countries are seeking long-term ways to manage this tension. Some of them have turned to “soft power,” or the persuasiveness of ideas and culture. These countries have attracted first-rate universities, invested in basic R&D labs, promoted the arts, launched top television and communications companies, and started citizen engagement initiatives. Just consider the change in local media. Until recently, the Middle East was known for state broadcasters that lacked a diversity of viewpoints. Today, the GCC hosts at least two world-class international television networks (Al Jazeera and Al Arabiya). Both sources produce candid content about local and international affairs; they also break important news and broadcast a diversity of opinions.

At a variety of levels, soft power is a crucial tool for dealing with the tension of stability versus openness. In addition to allowing more diverse media, the most important measure that governments can take is increasing the available forms of civic engagement. Even on contentious issues, there are possibilities for dialogue. In 2011, for example, when Saudi Arabia set up a new government agency called the National Anti-Corruption Commission (known as Nazaha, Arabic for integrity), it did so with a public statement that opened discussion of this issue. The country also launched a national dialogue initiative in 2003 that led to the government’s soliciting its population’s views through an unprecedented series of elections and consultations. This approach seeks to give citizens a sense that reforms need their participation to succeed. In short, governments that hope to continue balancing stability and openness must find a way to build their own capacity, not just for listening to more people, but also for responding in ways that show that the most important concerns are being heard.

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