We present new and rigorous mechanisms – a major weakness of the extant literature till date – to study spatiotemporal dynamic spillover effects of democratic shocks on cross-country economic growth in general and in Arab Spring, in particular. As a centrality of our research, we investigate how democratic shocks occurring in the ‘proximity’ of another country, is likely to trigger similar institutional reforms and growth upsurge in a system of interdependent economies. We define proximity in economic and socio-cultural sense and construct a distance metric based on these measures to estimate dynamic effects of (democratic) shocks. A spatial vector autoregressive framework is developed to study the first stage of dynamic complementarity with respect to democratic distance. Detailed response of democratic shocks and the transmission mechanism is modelled by Global Vector Autoregression method. Our work reveals discrete changes in regimes that run counter to the dominant aggregate trends of democratic waves or sequences, demonstrating how the ebb and flow of democracy varies among the world’s regions. The main finding suggests that the current revolution waves in the Arab World can be understood in light of the economic situation in a given country. More specifically, we find that high and upper middle income countries are immune to the recent democratic shock transference, whereas the lower middle and low income countries seem to be perfect candidates of another revolutionary wave.

The Arab Spring has suddenly overturned dictatorships in a number of countries, which now have a chance to reverse decades of stagnation which has left the countries behind in development and the populations impoverished. We propose a framework which can be useful in guiding policy as these countries rebuild. It consists of six key management elements, ‘M’s, applied to three key domains, ‘E’s, which are all intimately interconnected. We briefly introduce how the framework can be applied to Egypt, probably the most important Arab Spring countries because of its traditional leading role in the Arab world.