On ideas and economic policy: a survey of MENA economists

ABSTRACT

This paper examines how economic ideas have been shaped throughout history and the influence of these on the formulation of economic policy. We collect both quantitative and qualitative data from economists who are originally from the Middle East and North Africa region or working on the region. We find that economists and their ideas are more likely to be influenced by multiple schools of thought than adhere to one school. This multiplicity spills over into the type of solutions proposed to economic problems and thus policy implications. One of the main recommendations of this study is that there is a need for the development of economics and economists to recognize the impact of political and social issues that are not easy to grasp through modeling.

KEYWORDS:

• Schools of economic thought
• economic policy
• vested interest
• Middle East and North Africa
• Economic History

JEL CLASSIFICATION:

• B00
• B1
• B3
• N01
• N10
• O11

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Respondents vary in their definitions, sometimes referencing the Arab region, the Middle East, or the Middle East and North Africa region.

2 Ekelund and Hébert (2014, pp. 700–701), define economic ideas on a range that starts from ‘hazy perception, opinion, or belief, to a detailed plan … an idea that is the product of mental activities’. They define ideology as

… the study of ideas, but a more popular meaning is that it comprises a set of ideas, doctrines, or beliefs that form the basis of some cultural, political or economic system … Economic ideas – while of enormous potential importance to society – may catch on only when circumstances warrant. (Emphasis added)

3 See The New Classical Macroeconomics: Conversations with New Classical Economists and Their Opponents (Klamer, 1984). He interviewed Robert Lucas Jr., Thomas Sargent and Robert Townsend from what he classified as New Classical economists. He also interviewed James Tobin, Franco Modigliani and Robert Solow from the older generation of the Neo-Keynsians and from the younger generation, Alan Blinder and John Taylor. From the Monetarists he interviewed Karl Brunner and from what he described as Nonconventional economists he interviewed David Gordon and Leonard Rapping.

4 Klamer (1984, p. 237).

5 For detailed discussion and analysis of the different schools of economic thought, see the entry by Goodwin, in the New Palgrave Dictionary of Economics on history of economic thought. Also see Bloug (1991) on Historiography of Economics, as well as Canterbery (2001) and Harvey (2016). On contemporary utilization of old ideas of economists see Yueh (2018). For an alternative perspective see El-Issawy (2019). El-Issawy notes that there have been two waves of criticism against mainstream economics; one that stemmed from the dissatisfaction of students and scholars with the content of the economic curricula and the second caused by the reaction to the financial crisis of 2008. El-Issawy’s extensive study focused on three sets of criticism, the first set questions the fundamental assumptions, the second challenges some common beliefs: e.g. gender neutrality, pure objectivity and value free propositions, and that simple abstract models can explain the complex economic world and the third and final set provides a critical appraisal of the three neoclassical economic theories of income distribution, international trade and development. El-Issawy proposes five alternative approaches benefitting from insights of: the nature of human behavior and social development; experimental research; integration of knowledge from the examples of happiness and feminist research; replacing the neoliberal approach and finally attempts to reflect on the complex economic system.

6 The visit took place in November 1978.

7 During the visit of Robert McNamara in 1980, President Deng told him ‘We are very poor. We have lost touch with the world. We need the World Bank to catch up. We can do it without you, but we can do it quicker and better with you’ cited in Henry (2013, p. 64).

8 See Schumpeter (1943).

9 Hartwell wrote this in the late 1980s.

10 Hartwell (1989, p. 118).

11 Benassy-Quere et al. (2010) identify a third approach which is the political economy approach which could be considered as an extension of positive economics but instead of viewing the behavior of decision maker as exogenous it is considered as endogenous and determined by the state of the economy. For further discussion of the three approaches, see Benassy-Quere et al. (2010), chapter 1.

12 Roth (2015) provides examples from market design and match making that make resources less scarce and more efficient allocation of resources which economics is about and that modern economists can function like engineers.

13 Roth (2015, pp. 2–3).

14 Growth Commission Report (2008).

15 Other bad ideas include dealing with joblessness by relying on the civil service; underpaying civil servants compared to the private sector; cutting fiscal deficits by sacrificing public investment in infrastructure; subsidizing energy except for very limited subsidies to highly vulnerable sections of the population; open-ended protection for specific sectors; imposing administrative price controls; resisting urbanization/underinvesting in infrastructure; ignoring environmental implications; poorly regulating the banking sector and excessive interference and measuring educational progress solely by higher enrollments and ignoring the quality of education.