Why “underdevelopment” in the Middle East?The strengths and limitations of oil, Islam, corruption and other

hypotheses

Prof. M. CammettPOLS1270

April 5, 2012

From Ottoman-Era Glory to Relative Decline in the Middle East

Proximate Causes

• Weak integration in the global economy

• Low private investment

• Lack of technological development

• Industrial non-competitiveness

• High costs of doing business

• Poor educational systems, underdeveloped human capital

Deeper Causes: Competing Explanations

• Oil and the “Resource Curse”

• Islam, Islamic institutions

• Colonialism

• Corruption and Crony Capitalism

• Authoritarianism

Oil and the “Resource Curse”

Resource wealth poor economic outcomes

– “Dutch Disease”

– Rentier states and non-productive economies

The Resource Curse:Critiques

• Variation in oil-rich countries(Norway v. UAE v. Indonesia v. Algeria)

• Timing of institution building vis-à-vis influx of windfall profits

• Hertog: Populism and state autonomy

Is oil wealth convincing?

Islam v. Islamic Institutions

• Islam as a religion

• Islamic institutions (not Islam per se)

Islamic waqfs, corporate forms, inheritance laws disperse wealth inhibit investment

Do Islamic institutions explain underdevelopment in the MENA?

• Direction of causation?

• De factp choice/flexibility in corporate forms

• Ottoman policies, not Islamic institutions?

• Colonial and post-colonial policies

• Variable trajectories within the Islamic world

• Trajectories in the Middle East v. non-Muslim regions of the Global South?

Colonialism

Colonial Governance in the MENA

• Capitulations

• Colonial domination of productive, lucrative activities

• Minimal investment in public welfare & infrastructure

• Limited indigenous control over economy, policies

• Legacies for state-building

Limitations of “blaming” colonial rulers?

Corruption & Crony Capitalism

• The logic of the argument: Why corruption is bad for development

• Is the MENA especially corrupt?

• Is corruption bad for development?

Corruption and Other Aspects of Governance in Cross-National Perspective (2008)

Control o

f Corru

ption

Govt. Effecti

veness

Rule of Law

Voice &

Accountab

ility

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Middle EastEast AsiaLatin AmericaSouth AsiaSub-Saharan AfricaOECD

Authoritarianism and Underdevelopment in the MENA

MENA exceptionalism: “Voice & Accountability”

Logic : How might authoritarianism hinder development?

Campaign posters for Gamal MubarakEgypt, Sept. 2010

Authoritarianism & Underdevelopment?

• Mixed Evidence: – East Asia– Latin America– Russia, etc.

• Regime type v. governance

Towards an Explanation . . .

Historical legacies +

Post-independence policies