The Arab region faces a growing realization that development paths of the past are no longer capable of achieving national objectives. The problem of insufficient job creation in the Arab region is mounting, and without fundamental transitions in the Arab economies which ensure greater and sustainable job creation, the employment challenge will worsen rapidly and dramatically. The authors will articulate the broad course of action needed in the Arab economies. First, in Section II the authors describe the development challenges facing the Arab world, in particular, the challenge of employment creation. In Section III, the authors examine the constraints of the old development model in the region in terms of meeting these development challenges. Section IV proposes a set of transitions that constitute the contours of a new development model. Section V outlines the fundamental changes needed for making this transition, including improved governance, higher quality education and greater gender equality. The concluding section VI makes a few observations about the feasibility and issues of implementation.