# **_Economic crisis-called reforms_**

This gap between citizens and states in MENA kept widening to the point of challenging the capacity of governments to sustain their redistributive commitments. During the 1980s, some increasingly threatening tensions appeared and turned into a major crisis by the end of the decade.<sup>13</sup> The resulting slowdown in growth in the region has prompted some countries such as Morocco, Tunisia, and Jordan to launch reforms since the mid-1980s. In the 1990s, with the support of international financial institutions and western democracies most MENA countries implemented deep structural reforms aimed at laying the foundations for a market economy, thus paving the road to what was seen with great hope by the people of the region as the pathway toward a new SC. The question then was the extent to which these reforms effectively brought about a real new SC.

However, the structural reforms of the MENA economies undertaken in the 1990s failed to yield the expected results. Significant unevenness, slowness, and incompleteness of the implementation of the reforms (Dasgupta et al., 2004) as well as the volatility of oil prices faced by oil-exporting countries and the periodic droughts that struck countries with large agricultural sectors (Johansson et al., 2003) have often been invoked as reasons for this failure.<sup>14</sup> Given the fundamental need for MENA countries to diversify their economies, the phenomenon of the curse of natural resources (Sachs and Warner, 2001) has also been cited, in particular, in its interpretation as a consequence of the Dutch economic disease (Corden and Neary, 1982). Interestingly enough and more germane to the purpose of this paper, while the political economy interpretation of the natural resources curse has been almost systematically mentioned, it has rarely been analyzed in depth.<sup>15</sup> To be sure, the natural resources curse story

> 13 Declining oil prices, shrinking demand for migrant labor, diminishing remittance flows, and increasing international competitive pressure are among the root causes of this crisis that have been put forward (Yousef, 2004). Moreover, failing to encourage private investment, the regulatory environment hindered the development of exportoriented industrial sectors, thus creating obstacles to the integration of the MENA region's economy into globalized markets (Shafik, 1998; Abed, 2003).

> 14 Despite the increase in human capital made up of a predominantly young population, the economic performance of the MENA region was generally weak, with almost no growth in physical capital and productivity (Yousef, 2004). 15 Using a 1960-2016 dataset on Algeria, Gasmi and Laourari (2017) examine whether this heavily oil-dependent country has suffered from the Dutch disease and find no clear evidence of the existence of this syndrome. They then suggest that the puzzle of the deindustrialization of this country could be better understood by examining the curse of natural resources through the lens of political economy, in particular, the quality of its institutions and the distribution process of the oil rent. Asking whether oil and gas resources are a curse or a blessing in MENA, Aoun (2009) concludes that this phenomenon creates economic and social distortions that impede economic development and impoverish the quality of institutions, in particular, by hindering democracy and encouraging corruption. Looney (2005) emphasizes integration in global markets as an objective for MENA and argues that governments in the region should put a higher priority on enhancing the quality of governance, in particular, by improving voice and accountability and fighting corruption, than on conducting further economic reforms. Abed (2003), Abed and Davoodi (2005), and Abed and Gupta (2002) convey a similar message. Finally, in a dataset concerning 36 oil-rich

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