In Washington for meetings at the International Monetary Fund, Lebanese economist and advisor to the Ministry of Fiannce Toufic Gaspard addressed a group of policymakers on the economic opportunities for non-oil Arab countries in the wake of the recent uprisings. He argued for a reform of policies and a stronger state that would implement policies to enhance the private sector.

As policymakers in DC discuss the best ways to support the economies of the Arab world and the various challenges they are facing, Gaspard gave an assessment of the major obstacles and outlined a strategy to address them.

High illiteracy rates in Egypt, Morocco, Syria, as well as the growing unemployment rate in those non-oil states are the biggest perceived threats, he argued. In those countries, people with university degrees tend to have a higher unemployment rate then people without a higher education. This is due to the fact that demand for unskilled labor is significantly higher than the demand for university-educated graduates.

Citing U.S. and European history as a model for development, Gaspard recommended that Middle Eastern countries follow the developmental model in order to create job opportunities and links with other sectors that will fuel economic growth. This involves strong state intervention and extensive regulation and planning. Additionally, it requires overhauling the public sector and creating an environment where the private sector can grow.

Other elements that go hand in hand with economic development, he said, are democracy and free markets. The Arab world has been characterized by a weakness of institutions and civil societies, which makes the transition to democracy more difficult. He also called for strong macroeconomic policies to create sound economic growth. Without the support of the public structure, he said, the private sector will not be as strong and the result will be more unemployment and weaker economies.

Without major structural reforms, Lebanon and other non-oil Arab countries will continue to lag behind economically.

The U.S. and other Western countries can play a role in supporting the rise of these economies, by pushing those states to adopt sound policies. Gaspard called for a focus on non-oil states and to encourage those states to strengthen and implement reforms in their public sectors. The West can play a key role advising these countries while they transition through this phase.