Economic Development Middle East and South Asia - Essay Example

?Economic Development Middle East and South Asia Middle East For the last thirty years, the Middle East has witnessed both the decline and the increase in the economic growth. The major economic growth in the Middle East was experienced between the years of 1965-1985. Economic growth in the Middle East is largely due to the occurrence of oil and gas exploration as well as the ever rising prices of the oil products in the global market (Askari 9). Due to the increasing prices of oil, a number of countries in the region such as Iran, Kuwait, Iraq, Saudi Arabia, and the United Arab Emirates have benefited from increased national revenues. The dramatic increase of oil prices can be related to the Arab-Israeli war that occurred in the year 1973 and the Iranian revolution which occurred in 1979. The oil producing states in the Middle East have directly benefited from the high export earnings brought by oil earnings. Further, there has been a decrease in the employment opportunities due to the blooming economies of these oil producing states (Askari 9). Non oil producing countries in the Middle East have also benefited even though they do not produce oil. Their citizens have crossed borders to seek for employment opportunities as well as suitable markets for doing business. Further, several citizens in the non oil producing countries have migrated in order to earn money as teachers, construction workers and engineers in the oil fields. The earnings from the employment opportunities for these citizens have very important for the growth of countries like Egypt, Jordan, Yemen and Palestine. During the period of economic development in the oil producing countries in this region, non oil producing countries also gained from the high levels of foreign aid they were able to get from the oil producing countries (Askari 9). The increased oil revenues in the Middle East brought about several developments, especially in the social scene. The country’s infant mortality as well as life expectancy was improved. The infant mortality rates were halved while life expectancy in the Middle East region rose to over ten years. On the education sector, more citizens were able to enroll for school. Adult education levels were also on the rise (Rodney 45). Further, another benefit for increased oil revenues led to the decreased gap between the poor and the rich. This show that while the revenues from oil were increasing, some countries developed faster than the others in their national wealth. The major oil producing countries especially those with low population in the gulf were able to substantially improve the lives of their citizens. The income level per person in these countries would in some cases, surpass those of the European countries. On the contrary, countries such as Jordan and Yemen have remained to be the poorest in the region as well as in the world (Rodney 45). The economic growth, however, came to a decline in 1986. This period witnessed the decrease of oil prices from $28 per barrel to $10 per barrel. This huge drop in the price of oil was as a result of the overproduction of oil in these states. Consequently, the huge economic gains that had been made started to decrease. This decline in the economy led to the loss of employment opportunities as well as numerous job losses. Further, the non oil producing countries were not able to get foreign aid they had previously enjoyed from the oil producing countries (Rodney 45). Economic future The Middle East is currently being challenged by various factors in their economies. The most evident factor is the rapid population growth. The average population growth in the Middle East currently stands at 3% per year. This means that the population in a given state will double in every 20 years. The increased rate of population growth in this region is one of the highest in the world. The sub Saharan region in Africa still leads in the population growth rate in the world (Askari 10). Large population growth leads to various challenges in the economy and the available resources. Large population strains resources such as food, water, medicine, and education facilities. A large population also strains the countries in that they have to put in measure in order to prevent unemployment rates from increasing into dangerous levels (Askari 10). The second factor affecting the future of the economy in the middle eats is the price of oil, whether rising or decreasing. Several countries have seen the need to invest in other drivers of the economy so as to reduce the overreliance in oil. They have put more focus on the development of others sectors such as tourism, banking and agriculture. These sectors are important in case oil sources are depleted (Askari 10). South Asia From the 1990s, south Asia witnessed a steady increase in the level of economic growth to about 5.6 percent. This increase in the economic growth was more than that witnessed in the low income countries in the world; however, the growth was not higher than that of the East Asian countries. In the last ten years wide ranging reforms have been introduced in the areas that have had an impact in the economic sector. These reforms have also been able to eliminate some of the problems that were contributing to the slow pace of economic growth (Chowdhury & Mahmud 4). The south Asian countries were able to focus on a similar direction concerning the political influence on the economic policies of the region. In the recent Indian elections, the loss of BJP Government did not just signify leadership change; it has been seen as the lack of patience from the citizens in their political leader’s ability to deliver on their promises as well as improving economic growth (Chowdhury & Mahmud 4). Secondly, the over dependence on the private sector as the key contributor to the economy, produce and the main distributor of goods and services had taken over from a situation whereby the government officials and state owned enterprises were the main drivers of the economy. The healthy competitive market had been brought about by the absence of Licence Raj. This change led to the efficient allocation of resources and their usage in the South Asia region (Chowdhury & Mahmud 4). In addition, the reforms in the financial sector have led to economic increase in the South Asia Region. The financial sector has become one of the major contributing sectors to the economy due to the financial and capital market reforms. Countries such as Sri Lanka and Pakistan have made great improvements. On the contrary, India is steadily opening up to foreign investors who bring in foreign competition in the Indian market. India has been able to introduce new laws aimed at improving the performance of the banks. They have also been able to improve the quality of assets. Other countries such as Bangladesh have followed suit and is committed to improving the financial sector so as to be at the same level as India, Sri Lanka and Pakistan. Further, most countries in the south Asian region have achieved microeconomic stability. For instance, low inflation as well as low domestic interest rates has ensured that more investors do business in the region. Low interest rates ensure that investors are not overcharged whenever they take loans from financial institutions (Hossain, Islam & Kibria 27). Conclusion South Asia has made several developments in the past decade so as to be able to survive in the world economy. However, due to the numerous challenges in the economic growth, there is a need to liberalize trade. South Asian countries should also make efforts in attracting direct investment and use new technologies. Further they should invest in the improvement of human skills as well as taking active involvement in the regional and multilateral arrangements. To succeed in their national goals, south Asian countries should concentrate on economic development and poverty reduction. These challenges can only be solved through the expansion of economic resources. Political accountability and openness can also impact positively on the economic growth by making developments efficient and effective. On the Middle East region, most economists predict increased economic growth in the coming years. It is projected that economic growth in the region will stand at the rate of 3-5 %. Economic growth in this region will mostly depend on prices of oil, foreign investment which is currently not sufficient and the improved efficiency of most government industries. Population growth and the measures taken to curb its growth will also be important in defining the economic destiny of the Middle East. Works cited Askari Hossein. Middle East Oil Exporters: what happened to Economic Development? New York, Edward Elgar Publishing, 2006. Pp 8-9. Chowdhury Anis & Mahmud Wahididdin. Handbook on the South Asian Economies. New York, Edward Elgar Publishing, 2008. Pp 1-6. Hossain Moazzem, Islam Iyanatul and Kibria Reza. South Asian Economic Development: Transformations, Opportunities and Challenges. New York, Routledge, 1999. Pp 27-28. Rodney Wilson. Economic Development in the middle East. New York, Routledge, 1995. Pp 45-56. Read More