Islam, Globalization, and Economic Performance in the Middle East

Marcus Noland (PIIE) and Howard Pack (Wharton School)
Policy Brief
04-4
June 2004

The Middle East is a demographic time bomb: The economy must grow 5 to 6 percent annually for the next two decades to absorb new entrants to the labor force. The only plausible way for this to occur is through a successful process of cross-border economic integration. Islam itself is not an impediment, but public opinion harbors reservations about globalization. This can create a vicious circle in which insecurity in both its economic and cultural dimensions precludes those measures necessary to accelerate growth. The recent experiences of Saudi Arabia can be read as a cautionary tale: weak economic performance leading to pessimism about the future, possibly counterproductive policy interventions, and bouts of political extremism.

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