Economic Overview
The economy of the Middle East is very diverse. The Middle Eastern states have been known to be relatively unstable in the past few decades, experiencing many growth and decline cycles. The individual economies in the Middle East range from free market economies to government-led socialist economies. Together, the region is most well known for their oil production and exportation. Therefore, the status of the oil industry significantly affects the entire region.
The Middle East experienced the greatest economic growth during a 20-year period from 1965-1985. The growth was facilitated by the dramatic global increase in gas prices, which were stimulated by the 1972 Arab-Israeli War and the subsequent Iranian Revolution. As oil prices reached new highs, most states in the Middle East benefited from the heightened economy. Not just the oil-producing states (Iran, Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar) benefited from the high export earnings. Although oil-producing states benefited directly, non oil-producing Middle Eastern states also reaped some of the benefits.
Because of this newfound wealth, enormous social achievements occurred in the region. School enrollment went up dramatically, increasing adult literacy from 34% in 1970 to 53% in 1990. Adult life expectancy rose by 10 years, and infant mortality cut in half; however, not all results of this newfound wealth were positive. The income gap widened drastically among the Middle Eastern states. While some of the smaller, major oil-producing states, particularly those among the Gulf were able to achieve GDP per capita levels that challenged or surpassed Western European states, others—such as Jordan or Yemen—remained among the poorest in the world.
In 1986, the price of oil fell drastically as a result of the overproduction of oil. The foreign earnings that had driven large economic growth in the region were drastically reduced. The decline in exports created a major loss of jobs for people in both the oil-producing and non oil-producing states. The non oil-producing states lost all foreign aid form the oil-producing states, creating more of an economic gap in the Middle East.
Currently, economic developments in the Middle East continue to reflect the diversity of conditions existing among the region. Most high-income oil exporters (primarily in the Gulf Coast, including: Saudi Arabia, Kuwait, Oman, and the United Arab Emirates) continue to report solid economic growth and fundamentals. In contrast, other oil-producing countries—Iraq and Libya—are hindered in conflicts that result in vast humanitarian and economic consequences. Oil importers are predominately making continued, uneven progress in advancing economic status, often in line with difficult social conditions and poor political transitions. Most countries in the Middle East struggle with unemployment and overpopulation without the economic and structural reforms to improve conditions.
According to 2014 World Bank Statistics, the Middle East has the lowest regional GDPs in the world at US$1.52 trillion. The leading economy in the Middle East is Saudi Arabia, ranked 18th in the world—according to World Bank nominal GDP statistics. Growth in the Middle East is projected to remain flat at 2.2% in 2015 and beyond, according to the June 2015 issue of Global Economics Prospects. Countries with severe security challenges (Iraq, Libya, and Yemen) or limited economic cushioning (Iran and Iraq) are currently experiencing major economic challenges. According to President Obama, the real crisis in the Middle East is economic. The economies are not only detached from the rest of the world’s, but also from one another. Where most exports in North America, Asia, and Europe remain within those regions, only 16% of the Middle East exports to other Middle Eastern states. Although the economic future of the Middle East appears grim, a number of scientific publications listed in the Web of Science database shows that the standard growth in the Middle East, particularly in Iran, is nearly four times faster than the rest of the world.
