Download Economies of the ME & NA

Economic Development
in the Middle East
Introduction
Economic Development

Development = Growth plus Change

Growth: sustained improvement in the
level of per capita income

Change: sustained improvement in
institutions and organizations that
support growth
Economic Growth

Gross Domestic Product (GDP) = Market
value of all final goods and services
produced in one year

Real GDP = GDP in constant prices
Economic Growth = percentage change in
Real GDP
Supporting Institutions
 Family
 Culture
 Religion
 Law
Supporting Organizations
 Government
 Education
 Health
 Business
Economic Development
Approaches:

Market Orientation or Capitalism: Large
private sector and small public sector

Government Intervention or Socialism:
Large public sector and small private
sector
Period of Study

The 1950s: Independence, nation
building, creation of Israel and beginning
of military conflict in the ME

The 1960s: Decade of growth, land
reform, nationalism, and continued
military conflict in the ME
Period of Study

The 1970s: Oil boom, modernization,
urbanization, military conflict, and
revolution

The 1980s: Economic decline, rise of
religious fundamentalism, and interstate
war
Period of Study

The 1990s: Budget deficit and national
debt, and war

The 2000s: Continued military conflict,
international terrorism, and aspiration for
democracy
Why Not Western Theories?
 Religion
of Islam
 Oil Revenue
 Traditional markets
 Military conflict
Why Not Western Theories?
Religion of Islam:
Encourages mutually beneficial trade
 Encourages charity to help the poor
 Prohibits the taking of interest
 Regulates family law (marriage &
inheritance)

Why Not Western Theories?
Oil Revenue:
Greater personal income/wealth inequality
 Greater regional income/wealth inequality
 Rapid modernization and urbanization
 Neglect of agriculture
 Military expansion and war
 Continued reliance of exports

Why Not Western Theories?
Traditional vs. Modern Markets:
 Traditional
(bazaar or souk) with little
outside interaction
 Modern
but not free of government
intervention
Why Not Western Theories?
Political conflict & war




Built-in territorial dispute between neighboring
countries, resulting in inter-state wars
Inability to resolve the Arab-Israeli conflict
Rise of nationalism and fundamentalism
Lack of democracy and freedom