The turmoil that has overtaken Syria since March 15, 2011, will likely have a lasting effect on both state-society relations and the country's developmental trajectory. As this document was completed just before the eruption of the cycle of protest and repression — which is continuing at the time of publication — I have opted to avoid drawing conclusions based on an anticipated outcome. Rather, with minor adjustments, this research will address the structural aspects of the status quo ante, assuming that, whatever the outcome of the current uprisings, Syria's fundamental political-economic problems will be in need of attention.

Despite modest reforms and moderate growth, Syria's political economy confronts a unique set of interconnected problems that cannot be solved simply by prescribing traditional textbook economic policies. Key to resolving Syria's economic dilemmas is the political will to address problems of institutional, legal and administrative reform.

Over the past decade, until the end of 2010, the Syrian economy made some progress, but the regime struggled with a number of interrelated political and economic challenges. Chief among these were a protracted political succession and consolidation crisis that ended in 2005; a bout of regional and international isolation that, for the most part, ended in 2008; and an impending decrease in oil reserves. While the first two challenges have largely been overcome, the third persists. Complicating these challenges and threats is an ongoing drought and a mismanaged water-supply system that has led to the dislocation and migration of hundreds of thousands of people from the countryside to over-populated and under-serviced cities.

Although the Syrian economy weathered the global economic crisis of 2008, it has become clear that, if Syria is to withstand future shocks while maintaining the social and political stability the government desires, it must radically overhaul its economic and administrative structures. The Syrian leadership can no longer rely on the dysfunctional socioeconomic trade-off of reducing state subsidies while encouraging unaccountable big-business endeavors. While this trade-off put a gloss on the Syrian economy after the adoption of the Social Market Economy at the tenth Baath Regional Command Conference in 2005, it has harmed the middle and lower classes and threatens the stability that the regime so values. However, to undertake an overhaul of the country's economic and administrative institutions requires more than the conventional prescriptions for economic-policy adjustments, most of which clash with an administrative and investment environment that misallocates resources and often makes counterproductive investments.