Arab countries exhibited increasing polarization in their development paths in 2012 and 2013. Major energy exporters, namely Gulf Cooperation Council (GCC) countries, are recovering from the global economic crisis, owing to an expansionary fiscal and monetary policy mix. At the same time, net energy importing countries of the region are struggling to stabilize their economies amid worsening foreign exchange constraints. The polarization was also partly due to political instability and social unrest, which further obstructed the flow of intraregional funds from the major energy exporters of the region. The lack of confidence in intraregional business transactions resulted in the segmentation of economies and the loss of regional leverage, which amplified the problem of unemployment, even in GCC countries.
Amid those economic and employment difficulties, social development in the region has continued through policy reforms and institutional development. Nevertheless, social dynamics in the region were also affected by social unrest and political instability. The immediate policy challenge for most of Arab countries remains to create employment. The Survey of Economic and Social Developments in the Arab Region 2012-2013 highlights several policy options to tackle this issue, even in the region’s highly uncertain situation. In parallel to specific policy proposals, the Survey emphasizes the importance of policy dialogue in the area of employment and of a more constructive regional integration framework on this subject. The revival of regional leverage should be encouraged to halt the polarization and stabilize the socioeconomic development paths of all Arab countries.