DEVELOPMENT DESPITE MODEST GROWTH IN THE MIDDLE EAST

The Middle Eastern region is a major supplier of the world’s energy. It is also characterised by conflict, and is the focus of global geo-political interest both because of oil and the volatile nature of disputes in the region, which are perceived to have far reaching global security implications. Would we expect such a region to prosper? On the one hand, the answer should be affirmative on account of natural resource wealth, but on the other hand it could be negative due to the presence of conflict and the potential resource rent mismanagement. The actual record is somewhere in the middle. I argue that the region has made substantial progress in human development in spite of modest growth rates, which is related to the region’s cultural heritage with a low tolerance for poverty and inequality. Its outcome based institutional development is not unimpressive, which bodes well for long-term growth prospects. Additionally, recent oil rents have not been mismanaged. More, however, needs to be done to foster economic diversification and diminish dependence on natural resources