This is a rare and much-needed book on the challenges of development, but with special reference to the Arab countries of the Middle East. Despite the remarkable success of a number of these countries historically and, thanks to the oil resources of some of them even in recent decades, Professor Abdelbary correctly detects a general lack of sustainable economic development in the region. Along with that, he finds decreasing competitiveness and weak institutions throughout the Arab region at the present time. He is quite convincing in demonstrating that major economic reforms are needed and that these reforms need to be appropriately designed so as to be more inclusive, carefully coordinated and administered, and complemented by vastly improved institutions including good governance.

Rather than either a historical account or a descriptive one as is typical of other books on the region, his analysis is founded on a comprehensive analysis of Development Theory, including not only classical and neoclassical development theory but also the New Institutional Economics and distributional considerations. Unlike textbooks on the Arab region or more generally on Development Economics, it focuses on how the economies of the region have responded to shocks like the global financial crisis and the Arab Spring crisis, and features a careful econometric analysis of 17 Arab countries and 61 other countries from all over the world. In his empirical analysis, he goes to great lengths, both (1) to make use of variables deemed especially relevant to the Arab countries and to their problems, such as export concentration, the relative importance of oil rents, and a number of different governance indexes, and (2) to utilize estimation techniques designed to overcome the usual problems of (a) the relatively short time series of some of the key variables relevant to the analysis, and (b) potential endogeneity of many of the explanatory variables.

His straight-forward growth comparisons across regions early in the book shows clearly that Arab countries have fallen far behind the growth of all other regions, especially since 2009, i.e., a period including both the financial and Arab Spring crises. He traces this back to the general failure of Arab economies to maintain internal economic stability, but in this respect pointing to the greater success of some of the Gulf countries in using Sovereign Wealth Funds to smooth out some of these instabilities. The economic instabilities have in some cases contributed to extremely high-income inequality, armed conflict, violence, civil war and refugee problems. While Abdelbary points to a number of areas in which a number of countries have made significant policy reforms, such as in moving away from the rigidities of central planning, encouraging the development of private banks and credit, and in improving health and education, there have been major shortcomings in all of these respects. For example, the private sectors of these economies have remained weak, without sufficient competitiveness and distorted with inefficient regulations and all too much corruption. Similarly, although education has expanded, it has been of low quality, especially at high levels. Moreover, the constraints put on so many of the favorable developments by the failure of some of these same economies to balance their fiscal budgets and their balance of payments, have greatly limited the full extension of these services and the realization of their benefits.

From his very impressive panel regressions for overall economic growth across three different regions (developed, developing and Arab economies) within his 78 country sample, Abdelbary draws some interesting contrasts. For example, he shows especially large positive effects on growth of improvements in technology in Arab countries, suggesting that through improvements in the quality of education (especially at high levels), and improved governance, it could be possible for Arab countries to raise their growth rates significantly through the technology mechanism, in part by inducing more FDI. Similarly, from the especially large coefficient of the freedom from corruption component of governance for the Arab region, and the extremely low values of this index in most Arab countries (which indeed were responsible for the costs to development Arab Spring instabilities), he points to the potential for boosting growth in Arab countries by improving control of corruption.

He concludes this highly analytical book with a brief outline of a comprehensive set of political, institutional, economic and social reforms designed to mitigate the existing problems detected in his econometric and other analyses and to promote more inclusive growth in the years ahead. Hopefully, the proposed reforms will be given serious consideration by the people and their leaders throughout the Arab region, so that we may see a brighter path to the development being realized in the coming decades.