Middle Eastern Boom

Economic expansion taking place in former "economic backwaters"

Although explosions are what one thinks in terms of the Middle East and North Africa (MENA), the region is seeing an economic expansion that is giving new vitality to the region, The Wall Street Journal reported on July 19.

Inflows of foreign direction investment in MENA has quadrupled over the past six years from less than $5 billion to nearly $20 billion. That number doubles when including Turkey, a Muslim country that straddles the divide between Middle East and Europe. (Isreal is counted separately, but it too is experiencing rapid growth.)

Overall the economies in that region are growing at more than 5% a year, which beats most developed countries (though not as fast as China's 8% growth). Although oil is still the big story, oil-producing countries brought in $1.5 trillion in revenue between 2002 and 2006, those economies are looking to outside investors to diversify. Leading the charge are places like Dubai and Abu Dhabi.

The paper notes: "The real test of the Middle East's unprecedented investment boom will be whether it creates jobs--and with them the sort of budding middle class that is driving the dynamism of China and India."

Demographically speaking, half the 300 million people in the region are under 20 years old, and employing them will be essential not only to economic prosperity but also security, because poverty and violence go hand-in-hand. So much remains to be seen if this growth can continue, and what ultimate effect it may have. GEO