As in the first Development Challenges Report, which was published jointly with the LAS and endorsed by the Arab Economic and Social Development Summit in 2009, this report argues that the development model followed in the Arab region can be placed on a more socially just foundation. It attempts to solve ‘riddles’ such as whether inequality is low and fairly stable, as the data show, or high and rising as observed by the naked eye. It also aims to determine whether the region is truly devoid of mass poverty or if the wrong yardstick was used to measure it. On both these counts, the report casts doubt on the ability of current data to reflect the reality offers some pointers for more in depth work to close the gap between data and reality.

The report’s main conclusion is that in order to respond to the demand for dignity, social justice and freedom, the state needs to adopt a “Developmental state” model that is based on a new social contract of mutual accountability and shed the rentier based political economy model. This would mean that the state becomes more responsive and accountable to the citizen and allow for the citizen to take a more proactive role in societal affairs and break the vicious pattern of dependence on the state that has been the hallmark of the Arab social contract.

The report also argues for redefining the role of the state in the region and its relationship with the market. The Arab street has made clear that it is no longer willing to accept substandard public services and a private sector made up of politically well-connected businessmen who earn huge profits by virtue of political connections, which allow them to avoid taxes and charge non-competitive prices. Rather than considering that there is a dichotomy between the state and the market, the report emphasizes the symbiotic relationship between the two: the state provides the required support for a flourishing, inclusive private sector, which in turn exercises social responsibility by paying taxes and ensures decent working conditions for its workforce.