ver the past 30 years, the Middle East and North Arica (MENA) region has seemed to lag behind other developing marketseven with strong inrastructure development and an improved socioeconomic environment relative to historical data. With a popula-tion o 381 million
and a developing economy, this region has much potential and could be quite promising to the likes o privateinvestors, whether it be wealthy individuals or asset management rms, or multinational corporations. Additionally, this makes theregion an important thing to consider or overall US oreign policy. But beore these investors and companies will eel condentenough to invest in the region, as they have in Latin America and developing Asia, they will need to eel that the prospective returnon the risks that they are taking is enough to enter this market. The barriers that this region must overcome to allow or impactulinnovation and growth may seem insurmountable but through political and economic reorm, they are possible. And so, the UnitedStates oreign policy towards the region should be adapted to take into account these issues and actors. A policy that works tostabilize and grow this region will do more or the United States and the MENA region than the current policy.The current political unrest in the region doesn’t bring investors to the area, but progress to democratically elected governmentsthat look out or their citizens’ interests and work on transparency and governance or local corporations as well as multinationalcorporations may attract more FDI. Statistics such as the Doing Business Index, Global Competitiveness Index, Real GDP growth andunemployment show that the region has made progress in the past ew years but certain actors have been hampering this growth.These actors include, but aren’t limited to, lack o competitiveness in the global market, unattractive environments or startingbusinesses and stagnant growth due to dependency on the government. This is especially true since the same issues haven’t stalledother emerging markets as it has the MENA region. The governments o the region will require a laser-like ocus on political andeconomic reorm, and this push must be constant to attract investors and corporations.There are a ew initiatives that could stimulate private investment and development to the region. First and oremost, companiesand investors should ask or governance and transparency or their investments and development projects, because they need toassure that they are capable o investing in the area without having to worry about political and social risks. Another key actor whichremains necessary or any developing economy is the development o capital markets. Developed capital markets will oster innova-tion and growth through the ecient access and utilization o unds. Lastly, the region needs to diversiy out o the public sector andinto more industries. This will compliment the above-mentioned initiatives in ueling innovation and growth. And all o this would leadto a more competitive MENA region. Led by the rise in oil demand during and aer World War II, the MENA region started to become a global player. The “Intervention-ist-Redistributive” Model came to prominence around this time.
This was because new nations were created by the colonial powersaer World War II, and the new governments’ wealth rom oil allowed or them to provide or their citizens, and to an extent thegovernments had to as the region was in relatively poor socioeconomic shape. This model provided education, housing, health careand ood subsidies utilizing state planning, nationalization o businesses, and government programs.
Even though oil revenues werea key resource or this type o economic model, both oil exporting and non-oil exporting states were able to benet rom this, withthe non-oil exporting states exporting their labor to oil exporting states. Countries that exported oil also assisted these other stateswith loans, grants and similar aid.
This economic model can be tied to a rise in both pan-Arabism and nationalism. All o this led tocooperation amongst countries in the MENA region.From 1950 to 1970, the region increased its oil production rom 17% o the world’s total to 41%.
The high oil prices that lasted throughthe early 1980s allowed or the region to accumulate large sums o wealth.
This wealth, in turn, allowed or much investment ininrastructure and development in the region. The public investment model grew the public sector and many citizens o the regionbecame public employees. The public sector oered better wages, benets and job security.
This created an immense dependenceon the government or jobs as well as the lack o innovation and competition. Farooq Mitha in his historical socioeconomic analysiso the region says, “Citizens traded restrictions on political participation and transparency or economic stability and state run pro-grams, which provided social services and welare. The vast amounts o oil revenues also permitted the creation o powerul securityoriented institutions and high levels o military spending to protect the authoritarian governments rom the public activism.”
E-ectively, the citizens gave up civil liberties or nancial stability. This trade-o has allen apart, as can be inerred rom the unrestand uprisings in the region today. Citizens o countries that have oppressive regimes and/or haven’t been provided with the welareand nancial stability they were expecting have realized that this trade-o either isn’t working or the government simply isn’t givingthem what they expected.
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