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Economic Development in the Middle East

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.

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Economic Development in the Middle East

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  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

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