Economics at the Center of Arab Spring Ground Zero by Roger Brown

In early 2011, the Arab Spring quickly ignited in Tunisia, and within weeks its fires had spread to almost every nation in the Arab World. As massive demonstrations and conflicts ignited in city after city, Peruvian economist Hernando de Soto realized that he was witnessing what was perhaps the most important event of his lifetime. One question dominated his thoughts: Exactly why would the suicide-by-fire of Mohamed Bouazizi, and insignificant fruit peddler in a dusty backwater Tunisian town, resonate so strongly that the reaction would topple four governments?

He immediately sent a research team to Tunisia and other North African countries to find out. Institute for Liberty and Democracy (ILD) researchers worked in the streets and souks of North Africa for months. To their great surprise, they learned that there had been dozens of similar suicides by small entrepreneurs and businessmen across the region.

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Globalization in the West

“Even for the most successful multinationals’ profit margins in international markets are, on average, lower than margins in the domestic markets.” Robert Salomon, a professor of international management at the NYU Stern School of Business states, “It’s the liability of foreign markets. By virtue of the fact that you are foreign, you are at a disadvantage.”

When globalization was pitched as the strategic imperative du jour nearly two decades ago, that was not the case. It was supposed to act like a rising tide, lifting all boats in poor and rich countries together. Bolstered by the thought of hundreds of new assembly line jobs at multinationals in emerging nations, the middle class was expected to swell, which, in turn, would increase higher local consumption. New factories would be needed to meet this boost in demand, further raising local standards of living and handing the largest non-domestic companies a vast and enthusiastic expanded customer base.

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