Tunisia like the Asian Tigers, has been seen as a relatively stable country with a rapidly developing economy. According to the World Bank's country report, "Tunisia has made remarkable progress on equitable growth, fighting poverty and achieving social indicators". The now deposed leader, Zine el-Abidine Ben Ali, has been praised by numerous world leaders including Ban Ki-Moon, the UN secretary-general, the present president of France,  Nicholas Sarkozy, and the past president of France, Jacques Chirac, who called Tunisia an economic miracle.

 It wasn't just world leaders. Many other of the ever-expanding universe of international indexes gave Tunisia high marks. For example entrepreneur Mo Ibrahim's African Governance Index, Tunisia ranked 8th along with South Africa, Ghana and Botswana. According to the World Economic Forum’s Global Competitive Index, which measures the level of a country’s burdensome regulations and weak institutions, which inhibit job-creating, private-sector activity, Tunisia was one of the few countries in the region to come close to the average. Although according to The Economist, Tunisia ranked only 144th in its Democracy Index below China at 136, it was at least ostensibly less corrupt. It ranked at 59th in Transparency International Corruption Index above Italy at 67 and China and 78.

 It was not just the indexes who believed in Tunisia. Tunisia's stock exchange, though very small, has been one of the Middle East best-performing markets over the past decade. Like many other emerging markets, Tunisia recovered rapidly from the financial crisis and reached a new high just a few months ago in October. Its investments were considered so attractive that it became a destination for a "Frontier Fund" run by Morgan Stanley with money from pension funds including the Royal County of Berkshire in the United Kingdom among others.

 A study by the Boston Consulting Group concluded that Tunisia was one of a new group of fast growing economies with the catchy title, "African Lions". These countries, which also included Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, and South Africa, were supposed to be the new BRICs, because their growth rates were equal to China, Russia, and India and their per capita GDP at $10,000 was already higher than the BRIC average.

Tunisia also has a fairly high rate of literacy at over 74% and it ranks 18th in the world for expenditures on education. It is also computer literate.  Nearly 4 million of its 10.5 million people utilize the Internet with 1.8 million accounts on Facebook alone.

So where did Tunisia go wrong? Was it its oppressive dictatorship? Not exactly. There are other oppressive dictatorships in the world that do quite well. But there is one problem with non-representative forms of government: corruption.

All authoritarian governments everywhere by definition are not limited by any legal restraints. This allows elites to become rent seekers often through state owned companies and monopolies. Without legal limits the percentage of the GDP that they take for themselves will constantly increase. This was certainly true of Tunisia where President Ben Ali’s wife's family dominated the economy. Tunisia's first lady, Leila Trabelsi, and her relatives seem to have a finger in every pie. Her brother, Belhassen Trabelsi, had interests in banking, car dealerships, telecommunications, and publishing.

Like most developing countries Tunisia is a relationship-based system. So it is hardly surprising, according to the US envoy, that "seemingly half" of the Tunisian business community could claim a connection with Ben Ali through marriage. Even traditionally wealthy family like the Mabrouks felt it wise to have scion marry one of Ben Ali’s daughters.

The main cost to an economy of corruption is investment, the investments necessary to create jobs. For Tunisia and many other emerging and frontier markets, this is a major if not the issue. The unemployment rate in Tunisia is officially 13% but it is probably twice that for younger people. Even university graduates face an unemployment rate of over 15%. This is not unusual for these markets where unemployment rates among younger workers can rise as high as 40%. According to the IMF, the Middle East needs to grow 2% faster every year to avoid its present chronic and high unemployment.

The Asian Crises gave birth to a new phrase in economics, Crony Capitalism. This is really a term for a relationship based system, a system where capital is allocated according to relationships and not efficiently through the market. For investors, the best analysis is the one most ignored and that is whether the market in any given country actually works.