I thought I'd share my thoughts on what is going in Egypt right now. Its very hard to predict how events will play out in the midst of a crisis. It doesn't look Mubarak is going to come out of this crisis still being President but he could stay in power if the army backs him and he cracks down with escalating violence or he simply waits out the riots while using the army to protect the things he cares about. But the medium and long term prospects are more amenable to prediction. Here are three thoughts I've had about the medium and long term prospects for events in Egypt.
First, on the demonstrations themselves. It's very important that the Muslim Brotherhood were not the initiators of this wave of protests and still don't seem to be the driving force for their continuation. The reason I think that's important is because I've read research that suggests that onlookers observe who the first demonstrators are. If the first people on the streets are perceived as radical or fringe elements, onlookers discount the significance of the protests and stay home and watch the whole thing from their windows or on TV. But if the onlookers start to see people they perceive as mainstream, regular people ("middle class" if you like), they are increasingly likely to join in. In particular, I think this sort of argument is made by Susanne Lohman's article "The Dynamics of Informational Cascades: The Monday Demonstrations in Leipzig, E. Germany 1989-1991." World Politics v47, n1 (1994): 42-101.
Second, Egypt's percapita GDP is about $6,000 (2009). That's right about at the level that some studies suggest we should expect that IF a democratic regime emerged out of this, it could last for years - which might be enough time for it to increase its prosperity enough to stabilize. It's also at about the level where dictatorships get more durable. A third possibility could be that Egypt will enter a period of alternating elections and coups d'etat. We saw a lot of that in Latin America and in Turkey for a while. An interesting starting point for this line of reasoning might be an article by Adam Przeworski and Fernando Limongi "Modernization: Theories and Facts" World Politics v 49, n2 (1997): 155-187.
Third, Egypt does export some oil and natural gas but it's not considered a major exporter. To put Egyptian oil production in perspective, it is far below the rank of a country like Mexico in terms of oil exports. This may be good news for Egypt. There is a fair amount of evidence that reliance on oil exports is negatively correlated with the emergence/survival of democracy. These findings actually seem to hold for any economy that is dependent on the export of a single, valuable commodity. For a good starting point for this kind of reasoning, see Michael Ross' article "Does Oil Hinder Democracy?" World Politics v53 (2001): 325-361.