The cultural and political turbulence of the Middle East has a demographic dimension with potential to aggravate or relieve growing tensions.
A new report by Marcus Noland and Howard Pack of the Institute for International Economics, citing projections that the Arab world's population will gain the equivalent of two Egypts by 2020, calls the Middle East "a demographic time bomb."
The authors dispute assertions that Islam is to blame for economic underperformance of the Middle East. But they underscore the urgent need for improvement.
To create jobs as fast as the labor market is expected to grow, Arab countries of the Middle East will have to invest at rates of about 30% of gross domestic product and increase income by 5-6%/year.
"This is a very tall order," Noland and Pack say. "And recent history is not reassuring."
The main problem, the authors argue, is weak linkage to the world economy. Middle Eastern countries impose high tariffs on imports.
Most of the large ones don't belong to the World Trade Organization. The region's share of world exports has fallen steadily. And foreign direct investment remains relatively low.
"It is almost impossible to imagine the sustained generation of employment opportunities on the needed scale without a successful process of globalization and cross-border economic integration," conclude Noland and Pack.
That process, of course, is under bloody attack in Saudi Arabia, where demographic pressure is extreme, and Iraq.
For the region as a whole, however, the labor-force growth that defines the challenge also raises hope.
Birth rates are diminishing. If the Middle East forges the geopolitical links that it must if it's to absorb the burgeoning labor force, it will benefit from what the authors call a "demographic dividend" as the current generation enters its productive years.
Such a pattern has contributed to East Asian growth during the past 40 years.
"If the Middle East is able to cash in on this dividend," say Noland and Pack, "future pundits may praise the disciplined 'Islamic ethic' as a contributor to development just as erroneously as they condemn it as an obstacle to growth today."
(Online June 21, 2004; author's e-mail: [email protected])
