Economic Policy and Performance in the Arab World / Forcing Freedom: Political Control of Privatization and Economic Opening in Egypt and Tunisia

Article excerpt

Economic Policy and Performance in the Arab World, by Paul Rivlin. Boulder, CO and London: Lynne Rienner, 2001. x +206 pages. Append. to p. 211. Bibl. to p. 224. Index to p. 235. $49.95

Forcing Freedom: Political Control of Privatization and Economic Opening in Egypt and Tunisia, by Boyan Belev. Lanham, MD: University Press of America, 2000. 186 pages. Annexes to p. 208. Bibl. to p. 222. Notes to 242. Index to p. 248. $36. P.

Reviewed by Iliya Harik

The two books under consideration deal with the economies of the Middle East, and in that respect they complement one another. The first book, as its title suggests, paints with a broad brush a general picture of the process and progress of economic reforms in the region, while the second focuses specifically on an aspect of this process, privatization.

Economic Policy and Performance is a concise statement on the changes in Arab economies during the past three decades. The author starts with a brief discussion of development theory, concentrating mainly on economic growth under conditions of transformation from state-driven economic policy to one in which the economy is open to free market forces. He then presents a critique of neoclassical doctrine, followed by an exposition of trade theory which emphasizes increasing returns on scale rather than on simple comparative advantage. The author includes an extensive account of the expansion of the economies of South Korea and the other Asian "tigers," the purpose of which is to present the reader with a successful model different from the one under consideration.

The main body of the text consists of useful documentation of factors of production, and socio-economic conditions in Egypt, Jordan, Morocco, Tunisia, Syria, and the Gulf countries during the past three decades. The story of the first phase is basically one of state-led development: government ownership, regulation, and bias against the private sector. By the early 1980s, the governments of the region had started to implement policy changes aimed at reducing the role of the state in the economy, in accordance with the stabilization and structural adjustment policies advocated by the World Bank and the International Monetary Fund (IMF). However, the process of reform moved at a slow pace, and did not take hold until the 1990s. Throughout this period, the countries under consideration were subject to cycles of growth and decline, the author observes, which continued even through the most recent stages of the reform process. Rivlin concludes by underlining the difficulty of maintaining sustained economic growth, and by noting the drawbacks of the shifting international advice given to Middle Eastern countries. Finally, he recommends that governments in the region play a greater and more effective role in education and in providing support for economic activities.

Although Rivlin misses an opportunity to apply growth theory and spell out the relevance to the Arab economies of the Asian "tiger" model (mentioned in the early part of the book), he has produced, on the whole, an informative and useful study.

Forcing Freedom can be described as a thesis on the effective implementation of privatization policy in state-dominated economies, in this case Egypt and Tunisia. The question is why has Egypt, which in most other respects is comparable to Tunisia, lagged behind in the steps taken to privatize public sector companies. Both countries, the author observes, conceived and started the process during the same period, except that by the mid- 1990s Tunisia had succeeded in turning over 170 out of 400 companies to the private sector, while Egypt had privatized only 14 out of 317 companies designated for divestiture.

The thesis of the book-that the more restrictive a regime is the more effective it will be in producing results-is well argued. To demonstrate his point, the author resorts to the method of elimination, by means of which he shows that none of the other alternative explanations provides a satisfactory answer. …