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Economy In The Arab World

posted on: Nov 8, 2021

By: Anthony Bayyouk / Arab America Contributing Writer

The Arab world is home to societies with the highest incomes and societies with the lowest incomes in the world. The MENA economy is affected by many factors including political instability, geopolitical location, climate, and conflict dynamics. During the Ottoman Empire Arabs traded goods around the world. Yet, they always imported more than they exported. Arabs were good at exporting natural resources. Each nation had their own specialty. Palestine exported Oranges, Tunisia olive oil, and phosphate, Algeria wine, and Lebanon silk. Bonded together by Ottoman Empire the Arab World was strong in trade   

The MENA biggest trading partner was Europe. The Ottoman Empire allowed Europeans to travel through the Arab World without restrictions. In 1869 the Suez Canal was opened to commercial trade. While Arabs provided Europeans with agricultural goods Europeans provided the Arabs with manufactured goods that were worth more then what the Arabs provided. As time went on and the Arabs continued to import more than export their debt rose significantly.  When Arab nations couldn’t fulfil their loan payment European nations started to take financial control of the Arab nations. This was the start of new imperialism. 

Because of the industrial era literacy rates went up, health care improved and overall the Arab World was modernizing. The industrial era didn’t last long. The involvement of regimes, government instability, and disorganization led to hard times by the 1970s. The Middle East had to turn to the World Bank and Monetary Fund to make their loan payments.  Since the 1970s foreign aid has been pouring into the Arab World mostly from the United States and Russia, and most recently China. 

During the first half of the 20th century the discovery of oil changed the Arab World. Nations that had little or no trade relations with the Arab World quickly jumped to become friends with Arabs Specifically the nations of Iran and Gulf States. In the beginning of the oil discovery forign nations such as the United States controlled the production of oil. Later on Arab States wanted to control and produce their own oil. Today in the Gulf States the production of oil is a shared effort between Arabs, the United States, Russia and any other forgin nations involved. 

With the high demand for oil came a high demand for employees. As a solution the Gulf States started recruiting migrant workers. Today there are 23 million migrant workers in the Gulf States. The jobs were appealing to foreigners, they didn’t require high education or skill, and it came with good salaries, often triple the amount they would make in their homeland. Foreign governments encouraged their people to work in the Gulf States because it helped impoverished nations with their over populations. When foreigners work abroad, more often than not they  send money back home. Sending money back home is often the main purpose of their choice to work abroad. Billions of dollars in remittance are sent from migrant workers back home every year. Many migrant workers use the hawala system which sends the money through a system of brokers.

Trade in the Arab World is always associated with petroleum. Yet, there are many other goods sold in the region. In 2000 Fuel accounted for 75.1% of exports and now it accounts for 26.8%. The Middle East now exports textile, clothing, food, and fertilization among other things. In Jordan exports to the US went from 31 million in 2000 to 1.81 billion In 2018. Egypt has also seen a major increase. In Egypt exports to the US went from 1.3 billion in 2004 to 2.3 billion in 2018. Both Iran and the Gulf States want to diversify their economy but no nation has really made any effort to do so. Although Saudi Arabia plans to transform their economy by 2030. 

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