Subsidy reforms in the Middle East and North Africa: Strategic options and their consequences for the social contract

Georgeta Vidican Auktor and Markus Loewe

No 12/2021, IDOS Discussion Papers from German Institute of Development and Sustainability (IDOS)

Abstract: After independence, energy and food subsidies became a cornerstone of the social contracts in the Middle East and North Africa (MENA) countries. Governments spent heavily to reduce poverty and strengthen their own legitimacy. However, as government rents faded, subsidy spending became financially unsustainable and foreign donors pressed for reforms. Yet, reform has been challenging for all the governments as subsidies affect all consumers, therefore raising the risk of government delegitimisation. Several publications have analysed the subsidy reforms of various MENA countries, but few have systematically analysed their impacts on the prevailing social contracts. This paper shows that reforms in a key policy field such as subsidy spending can affect the nature of social contracts profoundly and distinctly, depending on the reform strategy. It assesses the reform processes that took place in Morocco, Egypt and Iran primarily between 2010 and 2017, thus before the United States once more tightened sanctions against Iran and before the COVID-19 pandemic broke out. We argue that governments applied distinct strategies to reduce subsidy spending without provoking major social unrest to reforms, with the effect that the social contracts of the three countries changed in quite different ways. Morocco's government removed most subsidies, especially those that predominantly benefitted the middle-class. [...]

Keywords: Subsidy reform; government spending; social contract; government legitimacy; social policy; Middle East and North Africa; Morocco; Egypt; Iran; protection; provision; political participation; subsidies; social cash transfers; public dialogue; information of public policies; repression; compensation measures (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ara
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/232574/1/175269922X.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:diedps:122021

DOI: 10.23661/dp12.2021

Access Statistics for this paper

More papers in IDOS Discussion Papers from German Institute of Development and Sustainability (IDOS) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().