Economy of the Middle East

Economy of the Middle East
Satellite image of the Middle East
Middle East economic integration as a means to sustain peace.

The Economy of the Middle East is very diverse. Composed of Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, the Palestinian territories, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, and Yemen the individual economies range from hydrocarbon exporting rentier economies to government led socialist economies to free market economies.

Collectively, the region is best known for producing and exporting oil. The oil industry does significantly impact the entire region, both through the wealth that it generates and through the movement of labor. Most of the countries in the region have undertaken efforts to diversify their economies in recent years, however. In the report, Science-Metrix says the number of scientific publications listed in the Web of Science database shows that the standard growth in the Middle East, particularly in Iran and Turkey, is nearly four times faster than the world average.[1]



An International Monetary Fund analysis of growth determinants indicates that greater integration with international markets could provide a substantial boost to income and growth.[2] See also: Middle East economic integration.

Prospects for the MENA Region[3]
MENA Region 2009 2010 2011
Real GDP growth 2.8 3.6 4.5
Real GDP growth (PPP) 2.7 3.6 4.5
Exports (change %) -9.5 2.6 5.2
Imports (change %) 1.2 4.9 6.6
CA balance (% of GDP) -0.1 1.5 0.9
Rank Country GDP Per
Total ($US B)[5]
1 Qatar Qatar $ 121,700 $ 101.2
2 Kuwait Kuwait $ 54,100 $ 150.2
3 United Arab Emirates United Arab Emirates $ 42,000 $ 200.4
4 Bahrain Bahrain $ 38,400 $ 28
5 Israel Israel $ 28,400 $ 205.2
6 Oman Oman $ 23,900 $ 69.43
7 Cyprus Cyprus $ 21,200 $ 22.85
8 Saudi Arabia Saudi Arabia $ 20,400 $ 581.3
9 Lebanon Lebanon $ 13,100 $ 46.03
10 Iran Iran $ 12,900 $ 876
11 Turkey Turkey $ 15,392 $ 1118.6
12 Egypt Egypt $ 6,000 $ 470.4
13 Jordan Jordan $ 5,300 $ 33.06
14 Syria Syria $ 4,600 $ 102.5
15 Iraq Iraq $ 3,600 $ 96.6
16 Palestinian territories West Bank $ 2,900 $ N/A
17 Yemen Yemen $ 2,500 $ 58.2
18 Palestinian territories Gaza Strip $ 2,494 $ N/A




Owing to large oil deposits and a small population Bahrain has a per capita GDP of $37,200.[6] Despite the nation's ability to provide for its population by relying on its oil reserves Bahrain has made efforts to expand its economic base. It has built refining capacity that outstrips its own oil production. Consequently, Bahrain actually imports crude oil from Saudi Arabia, refines it, and re-exports it. The state has expanded its industrial capacity to include Aluminum and signed a Free Trade Agreement with the United States in an effort to expand its export base. Because of heavy industrialization and the necessary construction that accompanies it and Bahrain's small population it relies heavily on imported labor. Consequently 44% of the population in Bahrain between the ages of 15 and 64 are foreign nationals.[6] Bahrain has also positioned itself as a strong player in Islamic banking in an effort to expand beyond resource exports and into a greater role in the international service industry.[7]


Larnaca International Airport, a hub for tourists travelling between Europe and Asia

The economy of Cyprus is a prosperous one. In 2008 it was classified by the IMF amongst the 32 advanced economies of the world.[8] The IMF forecasts that Cyprus will be the only developed economy to enjoy continuous growth rates through the 2009 financial crisis.[9] Cyprus has an open, free-market, service-based economy with some light manufacturing. The Cypriots are among the most prosperous people in the Mediterranean region. Internationally, Cyprus promotes its geographical location as a "bridge" between West and East, along with its educated English-speaking population, moderate local costs, good airline connections, and telecommunications.

Oil has recently been discovered in the seabed between Cyprus and Egypt, and talks are underway between Lebanon and Egypt to reach an agreement regarding the exploration of these resources.[10] The seabed separating Lebanon and Cyprus is believed to hold significant quantities of crude oil and natural gas.[10] However, the Turkish Navy doesn't allow the exploration of oil in the region.[10][11]


Tourist visiting the ancient Egyptian temple Abu Simbel.

Egypt derives a great deal of its foreign exchange from tourism. Consequently most of its labor force is devoted to the service sector.[12] Agriculture is also a large part of the Egyptian economy. The Nile River provides Egypt with some of the most fertile land in the Middle East. It produces food for consumption and export as well as cotton for domestic and foreign textile production. Egypt's other great resource is the Suez Canal. Roughly 7.5% of global sea trade transits the canal providing Egypt revenues in excess of $3 billion annually.[13] Egypt's industrial base dates back to the 1960s, when the nation undertook import substitution industrialization policies.[14] The inefficiencies of the state-run program have led the government to begin a privatization program and as a result Egypt enjoyed substantial GDP growth in the first decade of the 21st century.[12] It has also taken advantage of Qualifying Industrial Zone to expand trade relations with the United States. Despite these developments Egypt remains an underdeveloped country with a per capita GDP of $5,500.[12]


Iran has one of the largest economy in the Middle East. It is the world's 18th largest by PPP. Iran's major industries are largely state owned. The nature of the Iranian state-owned enterprises has led to a degree of inefficiency. Iran ranks 69th out of 139 in Global Competitiveness Report.[15] Iran has been able to subsidize inefficient industry through large oil revenues and maintain respectable growth rates. The nature of the state-driven economy has led to significant 'brain drain' in recent years as educated Iranians seek opportunities abroad. Consequently, Iran has begun a privatization effort in order to stimulate trade in accordance with its ongoing five-year plan as well as an ambitious economic reform plan.

The most important advantage that Iran's capital market has in comparison with other regional markets is that there are 40 industries directly involved in it. Industries such as the automotive, telecommunications, agriculture, petrochemical, mining, steel iron, copper, banking and insurance, financial mediation and others trade shares at the stock market, which makes it unique in the Middle East.[16] Iran has a high potential of becoming one the world's largest economies in the 21st century.[17]


Oil fire at the Rumaila oil field

Nearly 30 years of fighting, against Iran in the 1980s and the United States since 1991, has had a detrimental impact on Iraqi economic growth. Oil production remains Iraq's chief economic activity. The lack of development in other sectors has resulted in 18%–30% unemployed and a depressed per capita GDP of $4,000.[18] Reconstruction aid has helped to bolster the nation's infrastructure, however, an ongoing insurgency has handicapped economic recovery.


Israel's national leadership established a socialist economy when Israel gained independence in 1948. The purpose of this approach was to establish economic self-sufficiency, particularly agriculturally, in the face of hostile neighbors and to provide jobs for a population rapidly expanding through immigration. The socialist nature of the economy created a great deal of inefficiency which the government was able to offset through foreign aid, first in the form of West German Holocaust reparations then through direct aid, primarily from western nations.

Following the Yom Kippur War Israeli defense spending rose dramatically, exposing the weaknesses of the state-run economy.[19] The result was rampant inflation that led Israel to recall the lira in 1980 and issue the sheqel. This move did not sufficiently curb inflation and consequently the sheqel was recalled in 1985 in favor for the Israeli new sheqel, a move implemented together with a comprehensive economic stabilization program which stemmed inflation and set the stage for high growth in the 1990s. Israel had also undertaken a privatization effort beginning in the late 1970s. The economy received a boost in the early 1990s with the arrival of several hundred thousand immigrants form the former Soviet Union.[20] As a significant number of the immigrants were highly educated, Israel accelerated its privatization in order to encourage the high-skilled workers to stay. The new high-skill labor also attracted a lot of foreign direct investment. Israel's growth over the past decade has been commensurate with western developed nations as is its GDP (PPP) per-capita which is about $30,000/year – the highest of all the non natural resources dependent countries in the Middle East. It is described as "Very Highly Developed" on the UN's Human Development Index, ranking 15th among 169 world nations in 2010.

In September 2010, Israel joined the OECD, which praised Israel's scientific and technological progress and described it as having "produced outstanding outcomes on a world scale."[21] Indeed, much of the growth in the country's economy over the past couple of decades is attributable to the software, biomedical, electronics, telecommunications and other high-technology sectors as the percentage of Israelis engaged in scientific and technological inquiry, and the amount spent on research and development (R&D) in relation to gross domestic product (GDP), is among the highest in the world.[22]


Jordanian coastal city of Al-ʻAqabah

Jordan operates a rentier economy based largely on foreign aid, investment, and remittances. Jordan heavily depends on its highly skilled workforce in the oil-rich Persian Gulf to send back money to help support thousands of Jordanian families. Consequently its economic fortunes are tied to events in the international community. Although the standard of living in Jordan is significantly higher than other countries with similar incomes, many Jordanians opt for a job abroad because of soaring costs of living and high unemployment in their native country. Jordan is dependent on those remittances which have accounted for nearly 20% of GDP since 1975.[23] Jordan's dependence has had detrimental consequences. Following Iraq's 1990 invasion of Kuwait hundreds of thousands of Palestinians were expelled from other Arab nations. For Jordan this resulted in the significant loss of remittance revenue.[24]

Although the 2003 Iraq War brought detrimental consequences to Jordan's economy at first, it gave Jordan a huge boost in trade and investment with wealthy Iraqis re-settling in Jordan and Amman become a transit point for business and trade bound to Iraq. Jordan consequently became known as the "Gateway to Iraq" and later the "Gateway to the Middle East". Jordan's pro-business and pro-Western government has created incentives and free trade zones to spur further economic growth.

Jordan's private sector growth has been led by Palestinians. By taking advantage of Qualifying Industrial Zones manufactured exports have increased, led largely through the growth of a textile industry.[25] Jordan's shift to a free market economy has brought unprecedented amounts of investments into the economy. Jordan has one of the freest economies in the Middle East due to several key economic reforms in the past few years. Tourism, ICT, trade, and future oil shale and uranium exports will form the backbone of Jordan's economy.


Headquarters of Kuwait Petroleum Corporation (KPC) in Kuwait City.

Kuwait's small population and substantial oil resources led it to become a Rentier state.[26] The per capita GDP is $60,800.[27] As part of a diversification plan the Kuwaiti government has invested its oil revenues and maintains a sizable sovereign wealth fund. These investment currently account for nearly half of Kuwait's GDP.[28] Because Kuwait's wealth has provided a comfortable standard of living for its citizens it imports most of its labor. Roughly 80% of Kuwait's work force is foreigners.[27]


The economy of Lebanon has been severely inhibited by internal sectarian conflict and conflict between Israel and Hizballah. The government has incurred significant debt attempting to rebuild the national infrastructure following the Lebanese Civil War. Through foreign assistance the nation has made strides to rebuild, but still remains largely underdeveloped. Currently its trade deficit is nearly $8 billion, its external debt is $31.6 billion, and its per capita GDP is $12,704. Lebanon's economy is being rebuilt, especially by the remarkable growth of its industry (including cement) and services sector which presents more than 70% of the country's economy. Beirut is regaining its place as a center of the Middle East as foreign investments are making a huge comeback in all sectors and businesses and making huge profits, which will encourage more capitals investments.[29]


The Central Business District (CBD), in Muttrah.

Among the nations of the Middle East Oman is the most reliant on oil for its finances. Currently oil production and export accounts for 69% of the nation's revenue.[28] The oil industry is relatively young in Oman and consequently growth has come rapidly to the country. The government is also developing a plan to sustain its economy and divest its reliance on oil. By 2020 it hopes to reduce oil revenue to just 9% of its income.[30] Along with that plan the country hopes to move away from rentier economics and employ its citizens in the labor market and reduce reliance on expatriate labor.[30] To take its first steps in economic independence it has signed a Free Trade Agreement with the United States and is seeking to do the same with the European Union, China, and Japan.[30] It is currently maneuvering itself into the re-export and heavy manufacturing markets.

Palestinian Territories

Bank of Palestine, Ramallah

The economy of the Palestinian National Authority has been severely truncated by the ongoing conflict with Israel. Production has dropped since the beginning of the Second Intifada in 2000. The Gaza Strip has been blockaded by Israel and Egypt since June 2007 after Hamas took control of the Palestinian territory in the course of a conflict with rival Palestinian group Fatah. Only limited humanitarian aid has been allowed into the Gaza Strip.[31][32] In May 2010, the UN Office for the Coordination of Humanitarian Affairs stated that the formal economy in Gaza has collapsed since the imposition of the blockade.[33] The West Bank has fared slightly better since the split in the Palestinian power structure and Fatah took power in the West Bank Israel has opened some trade up. Still the Palestinian Authority is nearly entirely dependent on foreign aid. Collectively the Palestinian territories have a per capita GDP of $2,900.[34]


Qatar currently enjoys the regions highest per capita GDP at $101,000.[35] It has derived its wealth from exploiting its oil and natural gas reserves. With the revenues from its hydrocarbon industries Qatar has established a rentier economy. Qatar has also build established the largest per capita sovereign wealth fund in the world. With a population under one-million people the government has not found it necessary to diversify its economy.

Saudi Arabia

Saudi Arabia has 20% of the known oil reserves in the world. With its oil they have a national GDP of $546 billion and a per capita GDP of $21,300.[36] With this revenue stream the country has become the largest rentier economy in the world. As the oil wealth grew so too did the civil service. It grew from 37,000 in 1962 to 232,000 in 1981.[28] Further, as Saudi Arabia's civil service grew so too did its reliance on foreign labor which currently stand at 5.5 million or about one-third of its working age population.[36]

Currently about 40% of Saudi Arabia's population is under the age of 15.[36] This has led the government to accelerate investment in education and infrastructure in an effort to ensue jobs for the growing population and alleviate a chronically high unemployment rate. The state has announced plans to build six 'economic cities' in order to diversify its economy.


Stemming from a 1960s nationalization effort most Syrian economy is run by the government.[37] However, owing to the inefficient public sector, significant domestic subsidies, and considerable intervention investment in Lebanon inflation and external debt have become significant problems.[38] Consequently, the Syrian government has undertaken modest privatization reform in preparation for the opening of the Damascus Stock Exchange in 2009.[39] Modest oil production and an agriculture sector lead Syria's production while most of its employment is in the service sector. Its per capita GDP stands at $4,900.[39]


Levent financial district, Istanbul

Turkey has the world's 15th largest GDP-PPP[40] and 15th largest Nominal GDP.[41] The country is a founding member of the OECD (1961) and the G-20 major economies (1999). Turkey has been part of the EU Customs Union since 31 December 1995.

Turkey is often classified as a newly industrialized country by economists and political scientists;[42][43][44] while Merrill Lynch, the World Bank and The Economist magazine describe Turkey as an emerging market economy.[45][46][47]

Turkey is restructuring its economy in an attempt to gain full European Union membership. It began this policy in the early 1970s, abandoning its previous import substitution industrialization policy.[48] As privatization has taken hold in Turkey it has brought with it significant foreign direct investment. Additionally, the Baku-Tbilisi-Ceyhan pipeline has brought revenue to Turkey and enabled it to share some of the regional hydrocarbon wealth. Turkey's economy is currently led by its agricultural and textile sectors. It has a per capita GDP of $11,200, supplemented by some 1.2 million Turks working abroad.[49]

United Arab Emirates

The United Arab Emirates have used their oil revenues to develop a modern state. They have made considerable investment in infrastructure and are negotiating a free trade agreement with the United States in an effort to diversify their economy. Additionally, the nation has made a notable effort to develop a tourist industry by building attractions such as indoor ski slope and artificial resort islands. The UAE is also making an effort to attract foreign direct investment by offering 100% foreign ownership and no taxes.[50] Because of the massive growth and construction involved in their projects the UAE is heavily dependent on foreign labor.


Yemen has plagued by chronic economic mismanagement. With 35% unemployment, the nation relies heavily on expatriate remittances.[51] The reliance on foreign labor markets proved disastrous following the 1991 Persian Gulf War when Saudi Arabia and Kuwait expelled Yemeni workers and curtailed aid to the country in response to its support of Iraq.[25] Most of Yemen's GDP comes from its limited oil production. The bulk of its labor is involved in agriculture where its primary cash crop is khat.


  1. ^
  2. ^
  3. ^
  4. ^ CIA - The World Factbook GDP Country Comparison (Per Capita PPP)
  5. ^ CIA - The World Factbook GDP Country Comparison (PPP)
  6. ^ a b CIA World Factbook - Bahrain's Economy
  7. ^ Marcus Noland and Howard Pack, Arab Economies in a Changing World (Washington D.C.: Peterson Institute for International Economics, 2007), 119.
  8. ^ "IMF Advanced Economies List. World Economic Outlook, Database—WEO Groups and Aggregates Information, April 2008". 2008-04-09. Retrieved 2009-08-31. 
  9. ^ [1][dead link]
  10. ^ a b c "Turkey warns Lebanon, Egypt against oil exploration deal with Cyprus". AP/International Herald Tribune ( 2007-01-30. Retrieved 2007-05-04. 
  11. ^ "Cyprus accuses Turkish Navy of blocking oil exploration". The Daily Star. 2008-11-25. Retrieved 2009-06-13. 
  12. ^ a b c CIA World Factbook - Egypt's Economy
  13. ^ BBC News Suez Canal Fact Sheet
  14. ^ Alan Richards and John Waterbury, A Political Economy of the Middle East (Boulder, CO: Westview Press, 2008), 31.
  15. ^ World Economic Forum: Iran ranks 69th out of 139 in global competitiveness Retrieved September 18, 2010
  16. ^ "Iran offers incentives to draw investors". 2010-04-26. Retrieved 2010-07-29. 
  17. ^ "The N-11: More Than an Acronym" Goldman Sachs study of N-11 nations, Global Economics Paper No: 153, March 28, 2007
  18. ^ CIA World Factbook - Iraq's Economy
  19. ^ Richards and Waterbury, 204-205.
  20. ^ Immigration from the former Soviet Union
  21. ^ OECD's announcement.
  22. ^ Ministry of Industry, Trade & Labor - Foreign Trade Administration
  23. ^ Noland and Pack, 121.
  24. ^ Noland and Pack, 169.
  25. ^ a b Richards and Waterbury, 68.
  26. ^ Richards and Waterbury, 23.
  27. ^ a b CIA World Factbook - Kuwait's Economy
  28. ^ a b c Richards and Waterbury, 203.
  29. ^ CIA World Factbook - Lebanon's Economy
  30. ^ a b c CIA World Factbook - Oman's Economy
  31. ^ "Guide: Gaza under blockade". BBC. 2009-06-05. Retrieved 30 May 2010. 
  32. ^ "Gaza aid flotilla 'leaves Cyprus'". BBC. 2010-05-30. Retrieved 31 May 2010. 
  33. ^ "PRESS STATEMENT - UN HUMANITARIAN COORDINATOR:GAZA BLOCKADE SUFFOCATING AGRICULTURE SECTOR, CREATING FOOD INSECURITY". UN Office for the Coordination of Humanitarian Affairs, oPt (OCHA). 2010-05-25. Retrieved 30 May 2010. 
  34. ^ CIA World Factbook - West Bank Economy
  35. ^ CIA World Factbook - Qatar's Economy
  36. ^ a b c CIA World Factbook - Saudi Arabia's Economy
  37. ^ Richards and Waterbury, 194.
  38. ^ Richards and Waterbury, 195.
  39. ^ a b CIA World Factbook - Syria's Economy
  40. ^ The World Bank: World Economic Indicators Database. GDP (PPP) 2008. Data for the year 2008. Last revised on July 1, 2009.
  41. ^ The World Bank: World Economic Indicators Database. GDP (Nominal) 2008. Data for the year 2008. Last revised on July 1, 2009.
  42. ^ Mauro F. Guillén (2003). "Multinationals, Ideology, and Organized Labor". The Limits of Convergence. Princeton University Press. pp. 126 (Table 5.1). ISBN 0-69-111633-4. 
  43. ^ David Waugh (3rd edition 2000). "Manufacturing industries (chapter 19), World development (chapter 22)". Geography, An Integrated Approach. Nelson Thornes Ltd.. pp. 563, 576–579, 633, and 640. ISBN 0-17-444706-X. 
  44. ^ N. Gregory Mankiw (4th Edition 2007). Principles of Economics. ISBN 0-32-422472-9. 
  45. ^
  46. ^ "Fund management". The Economist. 2009-07-16. 
  47. ^,,contentMDK:20630704~menuPK:361720~pagePK:141137~piPK:141127~theSitePK:361712,00.html
  48. ^ Richards and Waterbury, 28.
  49. ^ CIA World Factbook - Turkey's Economy
  50. ^ CIA Wold Factbook - United Arab Emirates' Economy
  51. ^ CIA World Factbook - Yemen's Economy

Further reading

  • Hakimian, Hassan; Jeffrey Nugent (2004). Trade Policy and Economic Integration in the Middle East and North Africa: Economic Boundaries in Flux. New York: Routledge. 
  • Henry, Clement; Robert Springbord (2001). Globalization and the Politics of Development in the Middle East. Cambridge: Cambridge University Press. ISBN 0521626315. 
  • Noland, Marcus; Howard Pack (2007). The Arab Economies in a Changing World. Washington, D.C.: Peterson Institute for International Economics. ISBN 9780881323931. 
  • Richards, Alan; John Waterbury (2008). A Political Economy of the Middle East. Boulder, Colorado: Westview Press. ISBN 9780813343488. 

See also

External links

Wikimedia Foundation. 2010.

Поможем написать курсовую

Look at other dictionaries:

  • Democracy in the Middle East — According to the Democracy Index (published by the Economist, a British journal), the country in the Middle East with the highest Democracy Index score is Israel, with a score of 7.48, corresponding to the status of flawed democracy ; the only… …   Wikipedia

  • History of the Middle East — Further information: Timeline of Middle Eastern history Map of the Middle East This article is a general overview of the history of the Middle East. For more detailed information, see articles on the histories of individual countries and regions …   Wikipedia

  • Iraqi diaspora in the Middle East — The Iraqi diaspora in the Middle East is mostly located in Syria, Jordan, Iran and Lebanon, in addition to the well established numbers in the Gulf states and Israel. As a result of the Iraq War, the Iraqi refugee crisis is the largest in the… …   Wikipedia

  • Water politics in the Middle East — As a vital natural resource, water plays a key role in both global and domestic politics, particularly in terms of the need for states to ensure access to sustainable and adequate provisions of water. It is often only when supply levels are… …   Wikipedia

  • Women’s rights as a western foreign policy objective in the Middle East — This article will examine the forces behind the rise of Women’s rights as a western foreign policy objective in the Middle East and the impact application of this objective has had to date.The focus on women’s rights by powerful nation states and …   Wikipedia

  • American intervention in the Middle East — This article provides an overview of American interventions in the Middle East executed between 1941 and before the Iranian Revolution in 1978 1979. Background The United States’ relationship with the Middle East prior to the Second World War was …   Wikipedia

  • Middle East — The Middle East redirects here. For other meanings, see Middle East (disambiguation). Middle East …   Wikipedia

  • Middle East economic integration — The oil industry significantly impacts the entire region, both through the wealth that it generates and through the movement of labor. Most of the countries in the region have undertaken efforts to diversify their economies in recent years,… …   Wikipedia

  • Middle East Airlines — – Air Liban طيران الشرق الأوسط ـ الخطوط الجوية اللبنانية IATA ME ICAO MEA Callsign …   Wikipedia

  • Middle East Bank Kenya — Industry Financial services Founded 1981 Headquarters Mebank Tower, Milimani Street Nairobi, Kenya Key people A.A.K. Esmail, Chairman Philip Ilako, Managing Director …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”