Analysis of Economic Impact of Selected Conflicts in the Middle East by Sab - Article Example

Summary: Randa Saba manages to analyze the various conflicts in the Middle East, and the impact they had in the economic development of these states. Randa Saba does not only examine the effects of these conflicts on the particular states, but he also examines the economic impact of these conflicts in neighboring states. From the results of his research, Randa Sab was able to find out that any type of conflicts plays a negative role in the economic development of a state. It weakens the financial system of a state, increases inflation, leads to a contraction in growth, and also deficits in current accounts. Randa Sab extensively examines the post conflict recovery period. For efficient recovery of the state, after the conflict, it would depend on the institutions that govern the country, and the economic level of the country. Furthermore, Randa Sab explains that the structure of the economy would also play a great role in determining whether the country would experience an economic growth or not. This is, after the conflict. Other factors that play a role in determining the post recovery period of the war, includes the prevailing security capability and conditions of the country, the duration of the conflict, and the role of the international community in ending the conflict. Randa Sab also talks extensively on the economic impacts of the conflict, in the neighboring countries. From the research, their economic impacts varied, and this is based on the economic condition of the country, the financial capability of refugees that they host, external assistance, and the level of economic integration that the particular country had, with its neighbors (Sab, 2014). This paper is a critical examination of this article by Rand Sab. It identifies the areas that an improvement has to be carried out, and how the article relates to the current issues, that deal with business. This article by Rand Sab has a relation to the current business environment. This is because it talks about conflict, and how it affects an economy. One of the major factors responsible for economic growth is a successful trade. Furthermore, this paper explains the effects of the conflict to neighboring states and of particular concern are states that are economically integrated with the state involved in the conflict. This is an aspect of international trade, and hence this paper is directly related to international trade. Overview: This paper directly relates to the current issues in international business. For instance, Sab (2014) examines four major conflicts that occurred in the Middle East and their impact to the economic growth of the state, and the region under consideration. Take for instance the invasion of Iraq, in the year 2003. Sand (2014) explains that it took only one year for the GDP of Iraq to recover, back to its pre-war condition. The major reason advanced for this situation, is based on the fact that Iraq is a producer of oil, and it had a complex and well developed economy, when compared to the economy of its neighbors. Currently, oil is a major issue in international business. The global economy is experiencing a sharp decline in the prices of oil, and this has made the economies of countries that are relying on oil, to decline significantly. An example is the economy of Venezuela, which is experiencing a decline because of low prices of oil. Oil is an important tool of international trade, and oil producing countries normally use it as a bargaining tool, or as a method of trying to influence the policy of a given state. Take for instance, the current prices of oil, can be stabilized if countries such as Saudi-Arabia are able to cut down on their productions. This would mean that the supply is limited, hence leading to an increase in the prices of oil. However, Saudi-Arabia and other Gulf States have resorted to an increased production, mainly to pressurize Iran, into stopping its nuclear programs. Another reason might be to prevent United States from producing oil, by making it very expensive, and less profitable to the companies involved in the extraction of shale oil gas in Texas, and other parts of United States. Sab (2014) further explains that Lebanon took twenty years to recover from the conflict. This is mainly because it lacked the economic structure, and the resources that could help the country recover from its civil war. Furthermore, the reasons for the inability of Lebanon to recover quickly are based on the fact that it was unable to attract foreign investments into the country. This is because of a poor infrastructures, and lack of an attractive market for multi-national organizations. This is an indication that there are various factors that play a role in determining the economic growth of a given state. These include the existence of infrastructures that have the capability of promoting trade, political stability, and accessibility to the markets. Without the existence of these conditions, chances are high that foreign investors will not invest in the region, or the country. This would negatively affect the GDP of the given country. Another country that Sab (2014) talks about is Kuwait. In the opinion of Sab (2014), Kuwait has some oil resources, which can be used for purposes of international trade, and this is the reason for the quick recovery of Kuwait, after the war. Furthermore, the infrastructure in Kuwait supported international trade, and foreign companies were willing to invest in the region. For the economy of any country to be a success, there is a need of these countries having an infrastructure that would support foreign or international trade. This includes a good road network, proper channels of communication, and a liberal economic system, that would support the trade under consideration. These are some of the aspects that Kuwait had. The major strength of this paper is the manner which Sab (2014) manages to use illustrations and tables for purposes of explaining the impact of these conflicts on the economies of the Middle East countries. For instance, Sab (2014) manages to explain the impact of the war and post war period of the three countries using figures and percentages. In examining these percentages, Sand (2014) manages to identify the current account balance, of these countries, their exports and imports, and the gross international reserve of these countries. Through this information, it is possible to examine the impacts of war in these countries. In as much as this is strength, it is also a weakness. It is weakness because Sab (2014) does not provide the Micro-economic indicators of the three countries during the war, and the post war period. Micro-economic indicators normally provide internal economic conditions of a country. It is these internal economic conditions that play a significant role in determining the external economic capability of a country. Therefore, an economic analysis of a state, is not completes, without providing an analysis of the macro and micro economic conditions. Furthermore, it is the micro-economic conditions of a state that plays a significant role in determining the level of foreign trade within a particular country. Take for example the road infrastructure. It is an important micro-economic issue that determines the capability of investors to reach their target market. Wars have the capability of destroying the road network of a given state, hence limiting the ability of business organizations to access a given market. It is therefore an important micro-economic issue, which cannot be ignored. It is such kind of issues that Sab (2014) ignores. Another weakness of this paper is failure by Sab (2014) to explain the impact of these wars, in the global economy. Sab (2014) only focuses on the neighboring countries, of Jordan, and Syria, as opposed to the entire countries of Middle East, and the world. Take for instance, the Iraq conflict. This conflict had a global impact in the sense that it was able to increase the prices of oil. This is because Iraq is one of the major producers of oil, and the war on the country affected its production capability. This in turn led to an increase in oil prices because of limited supply. Therefore, to improve on this situation, Sab (2014) ought to have identified the impact of this war in the international system. This is through the identification of specific countries and economies that could be affected by the war. For instance, the 2003 invasion of Iraq, had an effect on the American economy, mainly because it was the country responsible for the invasion of Iraq. This means that it had to use its financial resources for purposes of invading the country, thus affecting its GDP. Furthermore, Sab (2014) should have dedicated a page in identifying the effects of oil shortage in the international system, and how it plays a role in undermining the economies of states, and increasing the costs of doing business. Furthermore, Sab (2014) fails to provide the best methods to use that can help in promoting good governance, and limiting the use of force or wars for purposes of solving a conflict. Therefore, Sab (2014) should have identified the best tools that these countries should use for purposes of promoting good governance. By closely looking at these countries, it is prudent to denote that they are not democracies, and hence the best method of solving conflicts, is through the enactment of a democratic system of governance. References: Sab, R. (2014). Economic Impact of Selected Conflicts in the Middle East: What Can We Learn from the Past? IMF Working Papers. Read More