Democracy's Dignity Dividend

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Two hundred and thirty-six years ago last month, a revolution was launched based on the "self-evident" truths "that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness." In celebrating the birth of democracy in the United States, we often focus on the then-revolutionary concept of self-governance, understanding democracy in the context of the ability of a people to select and reject its leadership. But this perhaps most-famous quote from the U.S. Declaration of Independence isn't about self-government at all. Instead, it suggests that the cornerstone of democracy lies in the even more fundamental, universal truth of individual human dignity.

It was a call for dignity, more than anything, that drove youth and other activists across the Middle East and North Africa (MENA region) to rise up and demand freedom, opportunity and an end to decades of oppression, corruption and authoritarian rule. In the months that followed this previously unimaginable wave of change, Tunisia, Egypt, Libya and Yemen have set out on paths to electoral democracy that, though not uniformly and not without setbacks, show significant promise. But again, the focus on leadership selection has eclipsed the needs and aspirations of the citizens. As such, the greatest challenge for these new democracies remains: how to deliver the opportunity and dignity at the heart of the Arab Spring. Democracy in these countries will be short-lived if it does not deliver in a tangible way for the average citizen.

On this, the region has seen little progress. Longstanding demographic and economic challenges that drove many to the streets in 2011 remain largely unaddressed, such as a burgeoning youth population entering the workforce in economies that are not growing fast enough to provide jobs. These pressures have only been exacerbated by the economic downturns that have accompanied the unrest and uncertainty of political transitions.

Entrepreneurship is increasingly recognized as a key ingredient to economic growth, job creation and the expansion of both civic participation and economic opportunity - particularly for youth and women - in the Middle East and North Africa. As a result, the number of initiatives supporting entrepreneurship in the region has increased dramatically, particularly following the Arab Spring. Overwhelmingly, however, these programs focus on individual entrepreneurs, aiding them with such things as skills training, mentorship and financing.

This approach may be putting the cart before the horse. If starting a business is so cumbersome and expensive as to exclude all but the already well-off; if an aspiring entrepreneur risks jail time for a failed venture; and if the education system fails to instill critical thinking, initiative and a fundamental understanding of a market economy, then no amount of assistance to individual entrepreneurs will result in the establishment of a sustainable, broad-based entrepreneurial sector in the region.

A case in point is Mohamed Bouazizi, perhaps the region's most famous would-be entrepreneur, the Tunisian fruit-seller whose self-immolation is credited as having set the Arab Spring in motion. Researchers at the Institute for Liberty and Democracy, led by renowned expert on the informal sector Hernando de Soto, have estimated that for Bouazizi to license his operation as a business would have required 55 administrative steps totaling 142 days and cost him over $3,200 in fees - for him, a year's net income. The Economist estimates that starting a business in Syria or Yemen would require 20 times the average annual income.

And that is if the system is working as it should. Too often, it does not, and on top of these overwhelming official hurdles there are the added costs of corruption. A 2009 study by the Center for International Private Enterprise (CIPE) and the Ahram Center for Political and Strategic Studies in Egypt found that, of a sample of more than 800 small business owners nationwide, 42 percent reported having had to pay a bribe to get their initial business licensed. Twenty-seven percent said they must continue to pay bribes to keep their businesses running.

So the challenge is twofold. On the one hand, the countries of the MENA region need to lower barriers to entry and reduce burdensome costs to doing business; and on the other, new institutions must be established that govern and define the free market and enable it to function, and to function for everyone. For the countries of the MENA region, getting this formula right - expanding opportunity in the formal economy while at the same time establishing effective, efficient, fair and democratic rules of the game - will be essential to expand opportunity so that democracy will deliver for the majority of citizens. To that end, businesspeople, entrepreneurs and would-be entrepreneurs - those who know best the challenges they face and the obstacles hindering their success - will need to exercise their democratic prerogatives to freely associate and, thus assembled, petition their governments. Governments, in turn, need to be willing to listen and respond. Outside of the ballot box, this is the essence of a functioning democracy.

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