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Abstract

Both in scale and scope, the private sector is incomparably more important in the national economies of the Arab world than was the case just a few decades ago. While important differences between countries persist, the contribution to employment, sectoral diversification, public service provision, and national capital formation has grown substantially across the region. However, even in the GCC - the economic bellwether of the Arab world - business remains technologically weak, structurally dependent on the state and, more often than not, governed through opaque and personalized structures – as has become glaringly evident during a series of assets crashes since 2006. Despite the economic crisis, there is an abiding willingness to delegate responsibilities to business. But states are still leaders of the economic reform process, while business is too often incapable of forward-looking collective action. The recent crises however are also a chance to change this state of affairs: the ongoing revamp of Arab corporate structures is bound to lead to differentiation and specialization of Arab private sectors. This in turn sets the stage for potentially more mature interest group politics and a wider contribution of business to reform processes. The improvement of business governance in the region will not only benefit economic development, but also, on more than one level, a constructive role of business in politics.

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