Historical Underdevelopment of the Middle East Economy - Essay Example

? Lecturer: Historical Underdevelopment of Middle East Economy Introduction The Middle East consists of around 16 countries in the region bordering Africa to the north east, partly bordering Europe to the south east and the other eastern states like India. The present populations of the countries show a high density and the average annual economic growth is still low with b a high of 4% for Qatar and a -0.33% for Syria according to the United States census bureau (International data base). The countries are endowed with high oil deposits in their respective reserves and this is the most economic commodity that supports their existence. On economic issues, there has been a traditional shaping of the way the economies are run largely by the common religion that the region shares. The political stability of the region has also not been stable owing to the many Islamist groups that have constantly fought for islamisation of all policies in the region according to the rules of the Quran. This region has not developed well relative to the world level of emerging markets (Kuran). This paper therefore seeks to establish the historical facts that have led to this underdevelopment since the development of the Islamic law and the Quran. The economic institutions that existed in pre-modern times were of the idea that all laws are to be implemented under duress. The major focus will be on historical institutions that that accounted for the subsequent institutional evolution in the region. Economic Institutions The growth of economy in the Middle East draws its historical background to the development of Islam. This brought in the economic institutions based on advanced contract law. The Islamic law brought in principles, regulations and procedures that governed the development of the economy of this region. Resources were to be pooled for economic purposes because the Islamic law on economy was generated on the fact that all Muslims were brothers and sisters and therefore the collective responsibility was sound for collective development. The second institution was set on finances without banks. At emergence of Islam, money was already in use and flourishing. By interpreting the Quran, there was a total ban on all interests paid on lending money. However, economic scholars of the time were not able to agree on the definition of ‘lending’ or what really constituted ‘interest’. Islam jurists supported the credit money in which there was devising strategies that allowed interest to be charged without violating the Quran principles. There were no financial institutions and therefore the lenders were just individuals and society groups. The third issue shaping the economic governance of the region was economic governance that was shallow. Most of the governance was made by the state in which case mosques, libraries and caravanserais were built and financed directly by the state. These, being Muslim states were built on the basis of two very basic principles; Provisionalism as well as Fiscalism. Any order that was contrary to these principles was not directly allowed and did not therefore get the support of the national government. Weak property rights as well as arbitrary succession were the order of the day which was reported during the early practices of economy. The Muslim statesmen in the region starting with those in the state of Saudi Arabia had tax policies that were very concrete. The same was soon spread to other areas of the missile east that had embraced civilization earlier on especially the pre-Islamic civilization. These laws however became obsolete especially in Iraq, Syria, Iran and Palestine. Therefore, just like in civilizations that were coeval, there was tax discrimination in that the non-Muslims paid more taxes than the non-Muslims. This principle was unsystematic and many more communities received expropriation. However, as the practice became more applicable, there was the extent of confiscation and imposition of new taxes in the economies. This means that this industry just never had a very serious connection with correct economic variables (Charles and Issawi 300). Most of the countries followed the issue of egalitarianism system on inheritance. The economies as composed of the Islamic law were purely based on inheritance. The Quran does not have rules and regulations on economic issues of which it should not give that it is a holy book. Therefore, there were no reservations for so much trade that used to take place. There were legally acclaimed heirs that existed at that time as well as laws governing who were to get the inheritance in case of one being distributed thereon. As time went on, there came a time when some of the laws started favoring the western nations that wanted to invest in the region. This particularly applied to countries that wanted to invest in oil industry. This being a rich oil and gas area, there was a need to get nations that were able to pump money into the economies. This meant that there had to be privileges that included security on life and their properties, breaks in taxes as well as exemption from rolls and fees charged on certain commitments. These reasons are having largely led to the underdevelopment of the Middle East economy over the ages despite having a lot of oil and gas deposit. The strict laws made it impossible for the economy to be developed faster than other countries with similar resources. The development of the Middle East economy cannot be complete without the mention of the issue of ‘The Four Puzzles.’ The patterns mentioned above helped a great deal in determining the economy of the region in the 10th century. A the same time, the west was bracing up for an economic Endowment that was based on institutions which were to move on the middle east and shape the economy thereon. By the 19th century, the west had developed very stable institutions that were able to be of valid i8nfluence on the economy of not only the Middle East but also the rest of the world. There was a spread of institutions and during the period of colonization, there was an increasing level of dominance by the Jews and the Christians, something that never had happened in the 18th century. The four puzzles are therefore related to the 19th century generation that aided the development of the economy of the region. In the 19th century, the French and English had established a very solid enterprise development structures which were to be based on the resources available in the area. Joint stock companies as well as multinational corporations were established in the region. Long term business projects were developed as well as there being financial organizations that were durable. Stock markets were formed which played a big role in the development of the area. This formed the first puzzle that questioned the under development of the area given that all these institutions in one form or the other existed. Based on the second puzzle, there was a big lag in the development in the existence of the waqf system. If a question was being set on the basis of not having piped water, street lighting and other development projects, the puzzle was questioning why systems for developing the social services were dysfunctional. The third law was questioning why the efforts by the state were mostly unsuccessful and disorganized to the extent of having to depend on the coming of the westerners. The material security in the region was less, bribery endemic and taxations were equally arbitrary. The fourth puzzle was that which was questioning whether there was religious favoritism between the three religions in the area; the Jews, Christians and the Muslims. As the western nations continued to dominate the area, it was not clear whether there was a possibility or no possibility of having developed these areas beforehand (Kuran 27). Conclusion The four puzzles were therefore part of the development criteria of the Middle East. It contains a lot of information about the reasons for the historical under development in the Middle East region. The Middle East has had economic stagnations over the years. This paper has therefore developed an understanding of the historical causes of under development in the Middle East. The major focus was on the historical stagnations that have been witnessed in the area in the wake of western arrival and aid. Works Cited Charles, Issawi and Charles Philip Issawi. An Economic History of the Middle East And North Africa. New York: Routledge, 2006. Kuran, Timur. Why the Middle East Is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation. University of Southern California: Carlifornia, 2003. Read More