How Institutions, Structure and Agency Hamper Tunisia’s Economic Revival

By Azzedine Layachi
Submitted to Session P4955 (Rivalry, Revival, and Survival: Contemporary Algerian and Tunisian Contestations and Reconfigurations, 2017 Annual Meeting
Pol Science
Maghreb Studies;
Tunisia’s political transition has been hailed as a success story in comparison to all other Arab Spring experiences. However, the economic transition has not kept pace with the political transition and has been difficult, hesitant and, at times, hopeless. The difficulties stem from 1) structures, legal framework, and entrenched “ways of doing thing” inherited from the Ben Ali regime; 2) a restrictive international economic context, and 3) compromise policies (or lack thereof) enacted by transition governments in 2011- 2014. In spite of funding from international financial institutions, the E.U., the United States and Arab Gulf states, Tunisia has failed to recover since the 2010-11 uprising. The economy suffers from slow growth, fewer foreign investments, crippled tourism, serious regional economic imbalances, high unemployment—especially among the youth—persistently high government expenditures, and budget and current account deficits. These serious economic difficulties threaten political change and stability.

This paper focuses on obstacles to economic takeoff in the structural (players and their power) and institutional settings (formal and informal rules and mechanisms). Particular attention will be paid to the role and power of formal and informal socioeconomic groups, such as the UGTT, the largest labor Union, the employers' organization UTICA, public company managers, big private businesses with political clout, youth movements seeking jobs and opportunity, and the organized unemployed. It will examine the institutional setting, especially the formal and informal norms inherited from the past which might be stifling good governance, maintaining bureaucratic inefficiency, inhibiting investment and privileging some economic sectors and agents over others. Several fieldwork trips to Tunisia and new field research in 2017 will include gathering data and information and interviews with a variety of economic actors.

Two empirical questions and a theoretical one will be tackled, respectively, in this paper. First, to what extent does the current configuration of internal and external political and economic forces (structure) inhibit Tunisia’s economic revival? Second, to what extent have Tunisia’s institutional reforms since 2011 leveled the playing field for all economic agents or merely replicated what the Jasmine Revolution tried to undo? Third, does democratic governance in transitional societies hinder or facilitate difficult but necessary economic policies?
The paper will address the first two questions using structural and institutional approaches and will seek empirical evidence on the nature and impact of the relationship between democratic governance and economic austerity policies.