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Five years after the Arab Spring uprisings began, Egypt, Jordan, Morocco and Tunisia have achieved reasonable levels of political stability.Given the region's large catch-up potential and young workforces, one must ask why this is so.One obvious explanation is that, despite significant progress in building stable governments, these countries remain subject to political risks that scare private investors.As a result, even as the reforms of the 1990s rolled back the state's economic role – in Egypt, state spending fell from 60 percent of GDP in 1980 to 30 percent of GDP in the 1990s – politics continued to shape markets.In Egypt, for example, the firms of 32 businessmen closely connected with then-President Hosni Mubarak received in 2010 more than 80 percent of the credit that went to the formal private sector and earned 60 percent of the sector's overall profits, while employing only 11 percent of the country's labor force. In Tunisia, former President Zine al-Abidine Ben Ali's cronies received 21 percent of all private-sector profits in 2010, though their firms employed only 1 percent of Tunisia's labor force.Unsurprisingly, this system generated only modest growth. By undermining investment in tradable sectors, appeasing them means hampering export growth considerably.
Sudan’s chance for democracy
The Arab Spring and the Western winter
Where will Egypt and Tunisia’s divergent paths lead?
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