Economic Environment in the Middle East

This chapter provides a summary of the connecting economic themes, development strategies, and economic challenges found in the Middle East. Overall, countries in this region have experienced different degrees of economic growth; therefore, the past economic development has relied heavily on a few key countries which have rather kept their human capital in unproductive public sector jobs. The GCC countries have, nevertheless, realized that such policies of the previous decades have been largely unsustainable. They have, therefore, set the foundations for market-based economies by undertaking structural reforms to support diversification and promote business/investment initiatives. The main comparative advantage of countries in the Middle East is their large segments of their populations below the age of 30, who are in their most economically productive phase. We argue, in this chapter, that countries in this region should, therefore, seize this opportunity in the immediate future, by reforming their educational systems, undertaking more R&D, encouraging innovation, and enhancing their young people’s entrepreneurship.