Gasmi, Farid, Kouakou, Dorgyles, Noumba Um, Paul and Rojas Milla, Pedro (2023) An empirical analysis of the social contract in the MENA region and the role of digitalization in its transformation. TSE Working Paper, n. 23-1423

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Abstract

This paper presents an empirical application and analysis of the social contract in MENA countries based on the conceptual framework proposed by Loewe et al. (2021). We suggest a simple operational model synthesizing a social contract's three main characteristics: Participation, Protection, and Provision, between a government and its citizens. This empirical "3-P" framework allows us to investigate the role that government provision and protection may have on citizen participation, which is particularly pertinent given the political and economic development of MENA countries. We compare our evaluation of the health of MENA countries' social contract to that of OECD countries, and find empirical evidence that the social benefits provided to citizens through improved delivery of basic services have come at the cost of impaired political Participation. This feature of the social contract in MENA may be considered one of the root causes of the social turmoil some countries have been struggling with in recent decades. Digital transformation is one potentially powerful channel through which the relationship between government and citizens can improve, and we find that it has a three-year lagged positive effect on the quality of the social contract in MENA and that this effect is inversely U-shaped. This suggests that structural and institutional improvements in MENA countries are called for before the quality of their social contract reaches levels comparable to those of OECD countries.