Many countries in the Middle East and North Africa continue to face major economic and political challenges, including volatile economic growth, low economic diversification, high unemployment levels, and, in some cases, pervasive authoritarian regimes. These economic and political challenges are interdependent, and reform is needed in both spheres if structural, long-lasting change is going to be achieved.

This book combines the World Bank’s concept of “good governance” with other analytical tools of political economy – including rent-seeking theory, political settlements approach, the resource curse, and Dutch Disease – to explore how government institutions in the region affect economic reforms and vice versa. The book also examines the role of institutions and performance of governance on rent distribution, evaluating how governments manage their, sometimes-abundant natural resources. In some “rentier states,” governments are clearly utilizing these resources for their own political ends even at the cost of negatively impacting economic growth, job creation, and social service provision. Economic growth is also constrained by low flows of both private and public investment toward productive sectors that need it. The book analyzes the differences between countries in the Middle East and North Africa in their economic and political structures to show how sustainable economic growth and a level of political democratization can be achieved through enhancing governance institutions.

This book will be invaluable reading for researchers on the political economy of the Middle East and institutional economics.