The Social Contract in the MENA Region and the Energy Sector Reforms

51 Pages Posted: 3 Feb 2017

Date Written: February 3, 2017

Abstract

During the last few years and because of the low oil prices in particular, the increasing awareness of the unsustainability of subsidized systems led several MENA countries to take steps to lower subsidies, which have been part of the social contract for decades, especially as far as the energy sector is concerned. Nowadays, the need for reforms is compelling for more than one reason. Namely, the subsidized system distorts market trends, fosters inefficient use of resources, depresses foreign direct investment and fuels over-consumption, which is no longer sustainable, particularly as far as the population growth in most of the MENA countries is concerned. In this paper both the resource-abundant countries and the energy importing nations will be analyzed, in order to investigate similarities and differences between the two and to carry out an initial assessment of the reforms in two representative countries, namely Saudi Arabia, exporting country par excellence, and Egypt, which imports energy.

Keywords: Energy Sector, Subsidies, Subsidy Reforms, MENA Region, Saudi Arabia, Egypt, Rentier State, Resource Curse Theories

JEL Classification: O1, O13

Suggested Citation

Brzuszkiewicz, Sara, The Social Contract in the MENA Region and the Energy Sector Reforms (February 3, 2017). FEEM Working Paper No. 4.2017. Available at SSRN: https://ssrn.com/abstract=2910888 or http://dx.doi.org/10.2139/ssrn.2910888

Sara Brzuszkiewicz (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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