ABSTRACT
This chapter explores some essential challenges facing a number of Arab states in transition, as well as the priority reform options before them, to re-engineer growth and translate economic gains into developmental achievements. The emergence of a strong private sector is analyzed not only as a force of economic growth and employment generation but also as a vector of social change. Changes have not yet ushered an era of economic prosperity or political stability and the imaginative expectation that the Arab region would become democratic along the fast lanes of recent Eastern European history quickly evaporated. Political reconfiguration which is unwilling – or unable – to address structural economic reforms are the most dangerous risk currently hampering democratic transition. The new, private economic forces of the Arab world urgently need genuine state encouragement and policy support to slowly engrain them into a more open socio-political order, spurring median social classes.
