Economy & Budget

Why Don’t Arab Economies Bloom?

Sixty-one years ago, in May 1948, after nearly two thousand years of Jewish dispersal, the nation-state of Israel was created by U.N. mandate.  As the “new guy” on the block, Israel immediately sought to become a responsible member of the world community.  Surrounded by enemies and lacking natural resources, it faced an enormous challenge — survival.  Six decades later, it not only has survived but has become an economic oasis within a regional desert of poverty and despair. Today, Israelis enjoy a much better quality of life than its Arab neighbors possessing tremendous oil wealth.  

Before discussing how Israelis became “the haves,” let us better understand why many  Muslims remain “the have-nots.”

Listing the Muslim countries of the region, it is readily apparent most, for decades, have experienced one-man/one-family rule  (Iraq, Jordan, Libya, Saudi Arabia, Egypt, Morocco, UAE, Syria, Bahrain, etc.) or, in the case of Iran, theocratic rule.  As such, Muslim leaders  retaining that sort of control have done so by doing nothing to endanger the status quo.  

As a result of such stagnant leadership, education suffered tremendously. Little was done to improve it beyond the ancient practice of learning by rote memorization. The educational system in most  Muslim states lacks any creative thinking stimulus. As one researcher points out, “If you look at the educational system in the Arab world, unfortunately, those who get the A’s, those who get the work, are those who do not ask questions, who do not think, who just memorize and follow.”  

China would agree. Several years ago, Beijing generated a list of the top 500 universities in the world. China’s list failed to include a single Arab university, while including seven Israeli universities. In the aftermath of 9/11, it has often been said the terrorists involved were “well educated.”  While this may be true by Arab educational standards, it is not by international standards.

A good barometer of a nation’s creativity is to look at the number of patents issued to its citizens. A study done to examine patents issued between 1980 and 2000 to citizens of the 22-member Arab League states — representing a population of about 300 million — revealed a meager 400 patents.  The citizens of just one evolving democracy, South Korea — a country representing one-fifth the population of the Arab League states — during the same 20 year period, were issued more than 15,000 patents. (As further illustration of a creative mindset left free to create, during their lifetimes, Alfred Nobel, after whom the Nobel Prize is named, and Thomas Edison received 355 and 1093 patents respectively.)  This lack of creativity among Arab populations explains why, while 100 Muslims exist for every Jew, the number of Nobel Prizes awarded to Jews exceeds their Muslim counterparts by a 60:1 ratio.

Lack of education and creative spirit among a nation’s citizenry clearly contributes to its lack of economic prosperity. While Arab League states boast a population and land mass greater than the US, they have a combined GDP less than the Netherlands and Belgium and equal to half of California’s. If oil were factored out of the equation, the Arab League nations would have fewer exports than Finland.  

An indicator as to how unleashing a population’s creativity can stimulate that nation’s economy was demonstrated by Iraq after Saddam’s 2003 ouster. A year later, the IMF noted Iraq’s economy was already outperforming that of all its Arab neighbors.     

Arab scholars concerned about the Arab world’s lack of economic success sought to understand why. They reached some startling conclusions, published in the United Nation’s Development Program’s “Arab Development Report 2002.”  They confirmed for the prior 20 years, per capita income growth in the Arab Bloc averaged a stagnant 0.5% — lowest in the world except for sub-Saharan Africa.  They confirmed unemployment was three times the world average.  They cited three deficits as serious obstacles to human development in the region:  lack of freedom (the Freedom Index ranks the Bloc last in civil liberties); lack of empowerment of women (half cannot write); and lack of knowledge.  

It is clear wealth accumulation for the average citizen starts with freedom.  Freedom begets knowledge, which begets stability via the rule of law, which begets a flourishing of human development and initiative, which begets economic prosperity.  Of interesting note is the Arabs enjoying the greatest human rights and quality of life live not in the Arab world but in democracies such as Israel and the US.          

Daniel Senor and Saul Singer’s recent book, Start-up Nation, analyzes the reasons for Israel’s economic miracle.  Despite its size (smaller than New Jersey), a lack of natural resources and being surrounded by enemies, Israel has blossomed into an economic juggernaut with the fastest growing, most dynamic and innovative economy in the world.  It has more companies listed on Nasdaq than Europe, China or India.  It has barely been affected by the 2008 economic downturn.

While the authors identify eight factors contributing to Israel’s economic prosperity, interestingly, one is anathema to Arab culture: assimilation. While Israel welcomes all immigrants with open arms — including Arabs, successfully assimilating them into its society — Arab countries do not.  Not only do Arab states, for the most part, discourage non-Muslim immigrants, some specifically discourage Muslims who immigrate to foreign lands from assimilating with non-Muslim natives so as to remain pure of thought.    

The Israelis have converted the only bountiful resource found in their country — the human resource — into a tool for creating a better life for themselves.  To them, it matters not whether these tools are of domestic or foreign origin — for all contribute to the nation’s prosperity.  Sadly, the Arab world has a hundredfold greater quantity of the resource but fails to appreciate the potential power it can similarly wield in giving its own citizens a better life.  

Change must come to the Arab world’s educational system if its citizens are ever to stimulate economic growth and improve their quality of life.  Unfortunately, they are burdened by a leadership determined to maintain control at the expense of such betterment.  They are destined to a life burdened by the yoke of despair unless they cast such leadership aside, releasing the Arab world’s true creative spirit as a force for good.  The status quo clearly is getting them nowhere.  Meanwhile, in the words of the children’s song made famous many years ago by the late television personality Mr. Rogers, for Israel as far as economic prosperity is concerned, “it’s a beautiful day in the (Muslim) neighborhood!” 


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