According to Praktike, or at least Alaa Al'-Aswany, the author he's quoting, the paucity of Arab literature isn't a problem requiring the drastic interventions of creativity or liberty, but merely a bit of Hernando De Soto. With no mature publishing industry, there's no way to effectively market or accurately profit from writing books. But slap some legal frameworks and protocols on the distribution system and it's a whole new ball game.
Interesting thought. But couldn't this fall prey to the Hernando De Soto problem? De Soto is an enormously popular and influential economist whose big idea was that capitalism failed in developing countries because there's no legal framework for converting informal holdings into formal assets. Add that, he argued, and the poor could participate in the free market too.
The problem was that banks and buyers didn't much want the title to 25 square feet of slum land, so the poor were no more able to net favorable loans or sell their property than before De Soto's intervention. Similarly, it may be that potential Arab writers don't want to flex their rhetorical muscles in full sight of paranoid regimes that employ a lot of non-metaphorical muscle. Formalize the publishing process and you'll only increase the ease with which governments can identify authors for reprisal. My understanding is that totalitarian societies operate under a "keep your head down" ethic, so it'd make sense that very few writers are keen to shine a bright light on the publishing industry and then publish the sort of controversial, or even interesting, works that are likely to sell.