The Economic Consequences of ISIS in Middle East - Research Paper Example

THE ECONOMIC CONSEQUENCES OF ISIS IN MIDDLE EAST By of the of school Introduction to theory of Production It explains the principles by which a firm decides the amount of each product that it sells it will produce the .Additionally amount of labour, fixed capital goods and raw materials that it needs to factor in. hence r production of this commodity. Of particular interest is labour. A factor such as political instability affects the availability of workforce substantially. Human beings are highly affected by hostilities and hostile environment. Political stability is crucial to ensuring that people have peace of mind to conduct business and make investments in various sectors and industries. The Middle East leads in oil production and its exportation. It has faced very many challenges in ensuring political stability since the invasion of a group commonly known as ISIS. ISIS, part terrorist group and part government, is alleged to have set up an Islamic state in Syria and Iraq. Islamic State of Iran and al- Sham( ISIS) advance across northern Iraq and declaration of a caliphate, a crisis that had been brewing for years, took the whole word by utter surprise. It then began a massacre in the middle east.it was formerly called Al-Qaeda in Iraq and became ISIS in 2013. Needless to say, the Middle East is a war-torn state due to the emergence and spread of the Isis. Consequently, economies slumped and regional economic ties broke down ( Coyne and Mathers 2002,pg.67). Isis has therefore led to a vast economic effect, mostly negative, in the Middle East. The worst affected country economically by the invasion of Isis was the northern part of Iraq. It is followed by the other countries such as Turkey, Syria and Lebanon. The economy of the Middle East greatly relies on oil that in Iraq. Other economic activities include tourism in Egypt, transport and real estate in Kuwait (Mc Carthy 2002, pg.59). All of these states have been affected economically by the Isis. Each has a different but almost similar story in relation to the labour force and fixed capital that they relied on for their economic growth. Lebanon, for instance, has a GDP per capita of about 16000 US dollars. Needless to say, the government needed to rebuild national infrastructure after the Lebanese Civil War and this has been detrimental in its economic growth. The Lebanese government had to become largely indebted to several states and this country is still largely underdeveloped. The war in the Middle East has affected directly the labor force. Loss of lives has led to a significant decrease in the size and skills of the workforce. As mentioned earlier, labor is an essential ingredient in the theory of production. Labor includes physical and mental work that. Its reward is money. The element of pleasure derived in undertaking a certain task also factors in but it has to be characterized by payment for it to be considered as labor. Any work that is done by a person to earn some income is therefore considered economic. Let us consider the characteristics of labour and the consequent implications for the economic effects on the Middle East. 1. Less mobility Labor is almost immobile. One needs to settle down in a particular area, have peace of mind and look for income generating projects. It makes a person more productive when they settle in an area. The Isis brought about a disturbance of peace and calm and made it almost impossible for people of the Middle East to settle in a particular area and become productive. Take, for instance, the sad scenario where Christians were forced to flee from the Middle East because of insecurity brought about by the Isis. When a suicide bomber caused an explosion in Syria killing several people, this caused restlessness among residents. Churches were burnt down leading to fear and thus Christians started to flee the area. These are people who worked in one way or another and were, therefore, a source of labor. However, when they are forced to move out of their homes, they can no longer work and thus the country is faced with an economic challenge a laborer finds it unfavorable to be forced to move to places far from home. 2. Perishability labor cannot be stored for future use. Any day that goes by without any work being done is considered wasted time and resources. Work cannot be saved to serve another day. Consider oil mining industry in Iraq. It requires a lot of manpower from the onset of discovering the oil fields to drilling the oil wells. In oil mining, time is also of the essence. Oil is a good that is in high demand throughout the world. Its supply limited with the Middle East ruling the industry. Around 30 years of war in Iraq has led to a decline in the economic growth in Iraqi. Needless to say, this war has caused oil drilling to slow down tremendously. Given that oil is needed in several industries as a source of energy such as transport and construction industries, this war caused by the Isis has slowed down these sectors too. Minimum or lack of development in these areas has resulted in depressed per capita GDP. Although the Iraqi nation is still recovering, the insurgency has crippled its economic recovery. As soon as Bahrain discovered that labor could not be stored, the nation reverted to banking and tourism economic sectors. It is ideally a real participant in Islamic banking. The days that were lost during the war culminated in lost labor and can therefore not be recovered. 3. Labor supply is independent of demand Its supply is inelastic. It depends majorly on the size of the population. In case of a shortage, supply cannot be increased instantly. It takes some time. For skilled labor, it may take even more time. During a war, countries put their entire workforce to fight (Ausenda 2002, pg.26). Many lives are lost during this period. The affected individuals seek refuge in neighboring peaceful countries thus causing an increased population in these regions. When the country recovers as is the case in the Middle East, labor is of the essence for economic growth. Consider the nation Israel. It was surrounded by hostile neighbors. Refugees fled to Israel for refuge thus its population expanded rapidly due to immigration. A socialist economy had to be developed for it to experience self- sufficiency especially in the agricultural sector. Eventually, the Israeli government faced so much inefficiency that prompted it to seek foreign aid. Despite all these efforts, rampant inflation still befell the nation after the war set in and labor was lost. At a time when Israel needed its men the most, the war had claimed their lives. It rose to its feet again thanks to the war in its neighboring country that caused immigrants to move into Israel. It is now among countries with the highest GDP in the world. The same does not apply for Gaza Strip. Its economy is at its worst because unlike other nations in the Middle East that are making baby steps and recovering from war, and Gaza Strip is still buried deep in this war. Its economy is on its descent. 4. Labor in non-detachable from the laborer One owns the skill that enables them to work. Absence means no work done. Take, for instance, skilled labor. A doctor needs to be present to attend to a patient. His power is only useful if he appears at the hospital or in his place of work. The situation in Jordan is not any different. It operates as a renter economy. Jordan survives mainly on foreign aid and remittances. Its skilled workforce resides in the Persian Gulf where there is a lot of oils. These people send money to Jordan to support their families hence the events in the Persian Gulf determine the economic well-being of Jordan. These remittances have accounted for about 20% of its GDP. When war set in Kuwait, thousands of Palestinians were displaced from Arab nations leading to loss of payment revenue in Jordan. It was a major drawback to its economy. People who had fled Jordan to look for jobs elsewhere could not save the situation because of their unwillingness to return to their homeland ( Gordon 2007,pg.51). Their skills were not useful to their country since they could not be detached from them. In the spirit of inseparability, Egypt has devoted most of its economic sector to the service sector and agriculture. The presence of River Nile contributes largely to the high fertility of the Egyptian land. The nation uses the skills of the farmers to cultivate their land and hence economic growth of the country. When the spread of Isis took place in the Middle East took place, vast economic effects experienced. However, the Middle East should be commended. It has made efforts to boost its economy. It has demonstrated the importance of putting in sound financial plans for economic development (Lynch 2006, pg.34). Its priorities have been to · Improve the role of banks in economic activity it makes people confident in the banking system and encourages financial intermediation. · Increase competition in the banking system They have encouraged the involvement of foreign banks such as America in their economy greatly · Enhance the soundness of the banking system it implies delegating a lot of attention to the real estate sector and jointly making follow-ups on financial sector balance sheets. · Encourage innovative business it has been made possible by coming up with one of the best institutions for research and development and upgrading several of their institutions, for instance, the learning centres. · Improve physical security. The Middle East has ensured that all its citizens feel safe wherever they are. Security has been beefed up in places of work, homes and towns. It has factored in considerably on productivity. In conclusion, although the Isis has impacted negatively on the economy of the Middle East, it is commendable that after such a terrible experience, the nation has made remarkable progress and its economic growth is remarkable. References Ausenda, G. 2002. Effects of war on society. Rochester, NY, Boydell Press Coyne, C. J., & Mathers, R. L. 2011. The handbook on the political economy of war. Cheltenham, Glos, UK, Edward Elgar. Gordon, H. 2007. Israel today. New York, Peter Lang Lynch, M. 2006. Voices of the new Arab public: Iraq, Al-Jazeera, and Middle East politics today. New York, Columbia University Press. Mccarthy, J. 2002. Population history of the Middle East and the Balkans. Istanbul, Isis Press. Read More