Development, Growth and Policy Reform in the Middle East and North Africa since 1950
Author(s)
Yousef, Tarik M.
Abstract
Prior to 1950, the countries of the Middle East exhibited some of the lowest levels of socioeconomic development in the world. For many of these countries, not even approximate economic statistics are available for the first half of the twentieth century. But the state of underdevelopment can be illustrated by looking at Egypt, the most modernized and populous country in the Arab world at the time. Egyptian per capita income stagnated in the first half of the twentieth century. The country lacked modern industries and relied largely on the cotton sector for export and government revenues, but agricultural productivity had been on a steady decline since the end of the nineteenth century (Owen and Pamuk, 1998). Prior to land reforms in 1952, three-quarters of peasants in this agrarian country owned less than an acre or no land at all. The neglect of human services allowed periodic epidemics and malnutrition to keep mortality rates high until the late 1940s. Education levels were well below other developing regions, with adult illiteracy estimated at 85 percent in 1939and only 23 percent of children ages 5-19 enrolled in school. But in the 1960s and 1970s, Egypt and other countries of the Middle East experienced robust economic growth, based largely on high levels of investment in physical capital that facilitated substantial increases in per capita income. It might seem obvious that the higher oil prices of the 1970s should have sustained the growth cycle in this oil-exporting region, but GDP growth per worker in the Middle East decelerated in that decade, and factor productivity growth actually turned negative. In the 1980s and 1990s, GDP growth per worker in the region was less than 1 percent per year, and modest gains in human capital were largely offset by a continuous decline in total factor productivity. A wide range of explanations for the economic slowdown in the Middle East have been expressed, including structural economic imbalances, the so-called “curse” of natural-resource abundance, deficient political systems, conditions of war and conflict and even culture and religion. This essay reviews the development history of the Middle East and North Africa region in the post-World War I1 era, with a focus on issues that are especially relevant to current efforts for economic and political reform.
