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Dr. Vandewalle advocated a state-building approach to economic reform, explaining that current economic reform must be done in the shadow of past institutional development (or lack thereof). He cited the discovery of oil in 1959 and the subsequent influx of capital during the last years of King Idris I's rule, coupled with the development of "formal" and "informal" government structures under Qadhafi, as contributing to the stagnant rate of expansion of modern political and economic institutions.

Whereas under Idris I, the increasing power and influence of the oil companies allowed the leadership to bypass the creation of modern institutions, the implementation of the Jamahiriya (state of the masses) under Qadhafi meant the dismantling of central ministries and banks, as well as the indiscriminate disposal of government documents. By 1986, Libya was enveloped in economic crisis. Although attempts at reform were certainly made, the absence of modern institutions "held [them] off in abeyance." Nevertheless, there was an element of "slow but growing pragmatism" among a group of Libyans who steadily gained influence throughout the economic crisis of the 1980s.

During the 1990s a western-educated technocratic elite began to infiltrate the "informal" political milieu. Vocal debate during General People's Committee meetings concerning the future of government and its political institutions illustrated the growing influence of this elite. During this period, security organizations began to relieve Qadhafi of some of his responsibilities, indicating that his tenure was near its end. The 2003 announcement detailing Libya's reintegration into the international system signified that Qadhafi's "everlasting revolution" was dead. The economic crisis had proven to Libya's "informal" government that an influx of capital from foreign investment could reinvigorate the economy.

Dr. Vandewalle contended that, despite recent progress toward economic modernization, very little could be achieved without the creation of modern political institutions to administer the economic reforms. The current political system acts as a hindrance to reform, owing to its lack of transparency and commitment to the rule of law. Thus, he believes that achieving meaningful economic reform will first require legal reform; this would, in turn, stimulate political and, finally, economic reform.

The prospects for this are unlikely, however. Instead, Vandewalle expects that the capital generated from the reopening of Libyan oil fields to western consumers will be used to preserve the political status quo rather than to build the modern institutions necessary for hitherto elusive economic reform. He also explained that although the revolutionary committees have been marginalized politically, they are likely to reemerge periodically, especially when their role in society and government serves the interests of the regime. Finally, Vandewalle warned that it would behoove the Libyan regime to become more accountable to the public, arguing that a marginalized middle class could have a destabilizing effect.