1. Economic Development in the Middle East Introduction

2. 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

3. 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

4. Supporting Institutions Family Culture Religion Law

5. Supporting Organizations Government Education Health Business

6. 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

7. 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

8. Period of Study The 1970s: Oil boom, modernization, urbanization, military conflict, and revolution The 1980s: Economic decline, rise of religious fundamentalism, and interstate war

9. Period of Study The 1990s: Budget deficit and national debt, and war The 2000s: Continued military conflict, international terrorism, and aspiration for democracy

10. Why Not Western Theories? Religion of Islam Oil Revenue Traditional markets Military conflict

11. 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)

12. 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

13. Why Not Western Theories? Traditional vs. Modern Markets: Traditional (bazaar or souk) with little outside interaction Modern but not free of government intervention

14. 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