I agree with Becker that the current uprisings are a momentous development in world affairs, but I have no idea how they are going to turn out and thus what their ultimate effects will be. This may be another 1848: a wave of revolts swept over Europe, yet when the dust cleared everything was pretty much as it had been. A populist revolt in a country without democratic traditions, even if it is successful in overturning the existing autocratic government, may be succeeded, as in the French, Russian, and Iranian revolutions, by simply a new form of autocracy.
Suppose, though, that whether or not the uprisings bring to power stable democratic regimes, the new governments will be more democratic than the old ones; then the question will be the effect of quasi-democracy on a nation’s economy. It is possible to have democracy without economic freedom: India illustrated this combination for decades after it became an independent nation democratic from the outset. Britain was democratic and socialist. Economic freedom varies widely across democratic nations, and across autocratic ones, producing some strange rankings of economic freedom. The 2011 Index of Economic Freedom jointly sponsored by the Heritage Foundation and the Wall Street Journal ranks Singapore second and Bahrain tenth, Norway thirtieth, Oman ahead of South Korea, the United Arab Emirates ahead of France and Hungary, Tunisia and Egypt ahead of Serbia and India, and Syria ahead of Ukraine. It’s a crazy quilt from the standpoint of correlating democracy with economic freedom. The wealthy countries tend to be democratic (with the principal exception of some of the small oil-producing countries), but are they wealthy because they are democratic or democratic because they are wealthy? In wealthy countries in which there is a reasonable equality of incomes across persons, people are self-confident and independent and so don’t like to be told what to do or say by government, and so there is strong pressure for liberty and democracy. Poor countries are much less likely to be democratic, though there are exceptions, of which the most important is India.
It is doubtful that the masses that have revolted in the Middle East will be content with democracy or understand the benefits of economic freedom. Most likely there will be a strong demand for redistibution of wealth, which in turn will foment strife with business interests, impair economic progress, and undermine the new governments, democratic or otherwise, of these nations. Discontent may grow and may result in the installation of Islamist governments that will curtail such economic freedom as these nations have. Or maybe not—I may be too pessimistic; the future of these countries is highly uncertain.
However, given the enormous pressure these countries will be under to maximize their revenues, if forced to guess I would guess that they will continue to rely on the international oil companies to produce and market their oil rather than imitate Mexico’s example and try to manage their oil industry themselves. The Mexican expropriation took place in 1938 and was a distinctly (and defiantly) socialistic measure, whereas the current Middle East revolutionaries do not appear to be old-fashioned socialists eager to nationalize the means of production. But it is perilous to make predictions when we do not yet know what elements of these societies will become politically dominant.