A strictly economic interpretation of events in Tunisia and Egypt would be too simplistic — however tempting such an exercise is for an economist. That said, there is no question that the upheavals in both countries — and elsewhere in the Arab world — largely reflect their governments’ failure to share the wealth.
The problem is not an inability to deliver economic growth. In both Tunisia and Egypt, the authorities have strengthened macroeconomic policy and moved to open their economies. Their reforms have produced strong results.
Annual growth since 1999 has averaged 5.1 percent in Egypt and 4.6 percent in Tunisia — not China-style growth rates, to be sure, but comparable nonetheless to emerging-market countries, such as Brazil and Indonesia, which are now widely viewed as economic successes.
Rather, the problem is that the benefits of growth have failed to trickle down to the disaffected youth. The share of workers under the age of 30 is higher in North Africa and the Middle East than in any other part of the world. Their economic prospects are correspondingly more limited.
University graduates find few opportunities outside of banking and finance. Anyone who has traveled to the region will have had an experience with a highly literate, over-educated tour guide.
With modern manufacturing underdeveloped, many young workers with fewer skills and less education are consigned to the informal sector. Corruption is widespread. Getting ahead depends on personal connections of the sort enjoyed by the sons of military officers and political officials, but few others.
It may stretch credulity to think that a high-growth economy such as China might soon be facing similar problems. However, the warning signs are there. Given the lack of political freedoms, the Chinese government’s legitimacy rests on its ability to deliver improved living standards and increased economic opportunity to the masses. So far, those masses have little to complain about, but that could change, and suddenly.
First, there is the growing problem of unemployment and underemployment among university graduates. Since 1999, when the Chinese government began a push to ramp up university education, the number of graduates has risen seven-fold, but the number of high-skilled, high-paying jobs has not kept pace.
Indeed, the country is rife with reports of desperate university graduates unable to find productive employment. Newspapers and blogs speak of the “ant tribe” of recent graduates living in cramped basements in the country’s big cities, while futilely searching for work.
In part, these unfortunate outcomes reflect the inflexibility of China’s education system. Students spend their entire four years at university studying a single subject, be it accounting or computer science. As a result, they have few skills that can be applied elsewhere if the job they expect fails to materialize.
There has also been a tendency to push students into fields like engineering, even though the Chinese economy is now beginning to shift from manufacturing to services.
Thus, China needs to move quickly on education reform. It needs to provide its university students with more flexible skills, more general training and more encouragement to think critically and creatively.
Moreover, there is the problem of less-skilled and less-educated migrants from the countryside, who are consigned to second-class jobs in the cities. Not possessing urban residency permits, they lack even the limited job protections and benefits of workers who do. And, because they may be here today, but gone tomorrow, they receive little in the way of meaningful on-the-job training.
The migrants’ predicament underscores the need to reform hukou, China’s system of residency permits. A handful of provinces and cities have gone so far as to abolish it, without catastrophic consequences. Others could usefully follow their lead.
Finally, China needs to get serious about its corruption problem. Personal connections, or guanxi, remain critical for getting ahead. Recent migrants from the countryside and graduates with degrees from second-tier universities sorely lack such connections. If they continue to see the children of high government officials doing better, their disaffection will grow.
The ability of disaffected youth — university-educated youth in particular — to use social media to organize themselves has been on powerful display recently in Tunisia, Egypt and elsewhere.
Last month, it was still possible for the Egyptian government to halt all Internet traffic and for the Chinese authorities to block the Chinese word for “Egypt” from its Twitter-like service Sina. However, in social media, as in banking, the regulated tend to stay one step ahead of the regulators. Such shutdowns will be increasingly difficult to enforce.
If Chinese officials don’t move faster to channel popular grievances and head off potential sources of disaffection, they could eventually be confronted with an uprising of their own — an uprising far broader and more determined than the student protest that they crushed in Tiananmen Square in 1989.
Barry Eichengreen is a professor of economics and political science at the University of California, Berkeley.
COPYRIGHT: PROJECT SYNDICATE
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry