Getting poorer Democracy is the economic medicine Islamic countries need
Mandle, Jay R
Jay R. Mandle GETTING POORER Why Islamic nations are falling behind The relatively well-educated men responsible for the September 11 terrorist attacks against the United States were citizens of...
...In other words, all of these nations have the resources but not the political will to significantly improve the lives of their citizens...
...Resentment and hostility often follow...
...The ability both to compete successfully and to use the resulting wealth to enhance human well-being depends on the democratization of Muslim countries and institutions...
...The HDI of Nigeria and Yemen rank higher than their GDP per capita standing, but against the latter's low level, this is not much of an achievement: Nigeria's HDI ranks 136 in the world of 162 countries, and Yemen's 133...
...They came from nations that possess neither a modern politics responsive to public pressures nor a prosperous economy...
...The first group is composed of the six oil-rich nations bordering the Persian Gulf: Qatar, the United Arab Emirates, Kuwait, Rankings of Selected Islamic Countries by Gross Domestic Product (GDP) per capita & the Human Development Index (HDI) Bahrain, Oman, and-the largest of this group-Saudi Arabia...
...Although it is true that U.S...
...Islamic states that do not depend on oil face similar problems of political oligarchy and economic rigidity...
...The last, for example, though still very poor and with its own significant Muslim minority, has experienced a rapid growth rate in GDP per capita of 3.2 percent per year since 1975, while maintaining parity in its HDI and GDP rankings...
...The UN reports the GNP per capita at less than $1,500 for Bangladesh and below $1,900 in Pakistan...
...Each of the six countries listed has a GDP per capita ranking far above its HDI rank...
...The absence of a democratic politics is what underlies the failure of the oil-producing countries to use their wealth to benefit their populations...
...Nevertheless, the primary responsibility for failing to improve living standards rests with the domestic leaders and institutions of the Islamic countries...
...In sum, the recent economic and human development performance in the Gulf states has been poor...
...What is particularly important in this regard is what has happened in Saudi Arabia...
...Jay R. Mandle is the W. Bradford Wiley Professor of Economics at Colgate University.s at Colgate University...
...Economic conditions contributed not only to the terrorism itself but also to the distressing degree of support for the attacks evident in the Islamic world...
...A slightly more favorable impression emerges in Indonesia, where the nation's GDP per capita ranking stands at 105, and its HDI a slightly better 102...
...To the extent that underdevelopment is at the root of terrorism (and it is by no means the only root), increasing the opportunity for Islamic nations to sell their products in this country and to work for our corporations is vital...
...With regard to the GDP per capita-HDI relationship, the pattern is also negative...
...Providing access to U.S...
...The report ranks nations according to per-capita GDP and then by the UN's Human Development Index (HDI), a standard designed to measure the ability of people to attain long and healthy lives, substantial education, and adequate standards of living...
...In such circumstances people become desperate to find a reason for their plight...
...I want to examine the economies of those countries by considering them in three groups...
...Economic growth requires effective participation in global trade and financial markets...
...The countries in the second group are also petroleum-rich, but are not geographically concentrated...
...Despite experiencing economic growth since 1975, Indonesia, Egypt, Pakistan, and Bangladesh all are desperately poor, with GDP per capita levels far below the world average...
...Furthermore, oil-rich states create lopsided economies that are not easy to change...
...They include Libya, Iran, Syria, Yemen, and Nigeria...
...Economic opportunity and benefits there are dispensed by elites, and for that reason are less than generous...
...A reliable indicator of the extent of such hoarding is provided by the United Nations Human Development Report...
...The United States shares some responsibility for the economic failures of the Muslim world...
...consumers and investment from U.S...
...To be sure, because they possess petroleum, they remain wealthy societies...
...More than anything else, success in these areas will deprive the terrorists of their political base...
...Thus Oman ranks thirty-eighth in the world in GDP per capita but seventy-first in HDI...
...Libya, Iran, and Syria all have lower HDI rankings than their GDP per capita levels...
...Our moral concern for reducing poverty, our belief in the value of open government, and our need to safeguard our own security all overlap in our relationship with the Islamic world...
...Seen in this light, the problem in Islamic countries has been not globalization but insufficient globalization...
...That means the economic failures of these Islamic countries cannot be wholly attributed to outside factors...
...Unhappily, the experiences of the second group of petroleum-producing Muslim countries are no better...
...Elites invariably resist change...
...According to UN sources, Saudi Arabia's economy declined by an average of 2.2 percent per year over this twenty-four-year period...
...What this review suggests is that the Islamic countries have failed to achieve increased living standards for their people...
...By this standard, the performance of the Gulf states is very weak...
...During these same years, substantial advances in well-being were achieved in other poor countries-Korea, China, Thailand, Malaysia, and even India...
...corporations, as we have done recently in Pakistan, is the first step...
...Furthermore, among all these nations, human development ranks either at a low level or at a level substantially below its ranking in wealth...
...The fact that poor countries like China and Malaysia have found avenues to economic growth suggests that the internal structures and policies of the Islamic nations, not external forces, have blocked economic progress...
...In this regard, we should remember that no societies have, over the long run, experienced substantial advances in their standard of living by curtailing their access to overseas consumers or direct investment from abroad...
...This is even truer where wealth is hoarded at the top, as is typical of these Gulf states...
...It is not hard to imagine that such anger would turn against the United States, the symbol of successful modernity...
...It is not a surprise to learn that the gross domestic product (GDP) per capita of the oil-rich Gulf states averages $12,390, far higher than the global average of about $7,000...
...But what comes as a shock is that between 1975 and 1999, four of the five Gulf states for which data are available experienced decreases in their per-capita GDP, a comprehensive measure of economic output...
...By contrast, with the exception of the Gulf states, the Islamic countries are low-income nations in which economic growth has not been experienced at all in recent years...
...Saudi Arabia is not much better with a per-capita GDP that stands at forty-two and an HDI of sixty-eight...
...As a result, it has been difficult for their citizens to live productive and useful lives...
...Terrorism will not flourish in an environment in which standards of living rise and people can pursue productive lives...
...policies have not always paid sufficient attention to Muslim interests or sensitivities, there remains little hope for progress, let alone peaceful coexistence, unless Muslim nations themselves come to understand the connection between democracy and prosperity...
...But Saudi Arabia, Kuwait, the United Arab Emirates, Oman, and Bahrain have neither experienced economic growth nor used their oil wealth to the widespread benefit of their populations...
...Rather than tie our interests to current antidemocratic regimes, we should encourage greater economic dynamism and greater political participation...
...Furthermore, in both these countries, as well as in Egypt, the HDI ranking is worse than the GDP per capita level...
...In my third category are the large Muslim-dominated societies that stand outside of the club of oil producers-for example, Egypt, Pakistan, Indonesia, and Bangladesh...
...No matter how wealthy a country is, such a decline is bound to mean a drop in living standards...
...For the United States the lesson should be clear...
...Economic development will inevitably result in the creation of new sources of wealth, and it is not at all clear that the groups in power will be willing to risk the challenges of such dynamism...
...Jay R. Mandle GETTING POORER Why Islamic nations are falling behind The relatively well-educated men responsible for the September 11 terrorist attacks against the United States were citizens of Muslim-dominated "failed states...
...The economies of Islamic nations have been either one-sided (as in the petroleum countries), flawed (as evidenced by relatively low HDI scores), or not developed enough (as in Egypt, Pakistan, and Bangladesh...
...All of these countries demonstrate some combination of national poverty, economic stagnation, and the failure of governments to use the resources in their possession efficiently to advance human well-being...
...Where the GDP ranking is higher than the HDI ranking, the opposite is the case...
...Growth-rate data for Yemen are unavailable except for the years after 1990, but are negative for that period as well, no such data are available for Libya at all...
...In some cases this difference is very large...
...An HDI ranking higher than its GDP per capita ranking means that a country is using its wealth well in benefiting its citizens...
...About 70 percent of the global Muslim population lives in fifteen countries...
...Television and other modern means of communication have made it easy for the world's poor to observe Western living standards...
...As the dominant voice in organizations such as the World Bank and the International Monetary Fund, we are largely responsible for the damaging policies of free-market austerity imposed on the third world...
...It is important that we understand the economic facts behind those failures...
...Still, such efforts are only a partial response to the problem...
...Elsewhere in the Muslim world-in the third grouping of countries-the economic situation is no better...
...With the exception of Libya, all have per-capita GDP levels lower than the world average, with Iran and Nigeria experiencing decreases in this measure since 1975, while Syria's economy has stagnated...
Vol. 129 • February 2002 • No. 4
