Cause and effect

Part I (Part 2)

The evidence of dismal economic condition in Muslim world, compared to the other regions of the globe, is obviously staggering. Even a scant examination of the key economic indicators in prominent Muslim countries reveals abysmal results. I put together a table showing the values of a few such indicators for 17 prominent Muslim countries and carefully examined and compared and contrasted them with those for the industrialized nations. These 17 countries all have a population of more than ten millions, at least 88% of which is Muslim. The findings may be appalling but not totally new or surprising to us.

With the exception of Turkey and a couple of oil-rich counties, namely Iran and Saudi Arabia, almost all the other Muslim countries I investigated have a per capita income level of less than $5,000, in most cases even less than $2,000. To put this in perspective, the per capita income for United States is around $45,000, which is currently ranked number seven in the world. The share of population living below poverty line (defined as the annual income of nearly $20,000 for a family of four according to the US Census Bureau) is another telling statistics. This rate in key Muslim countries ranges from 12% in Syria to as high as 63% in Niger, 53% in Afghanistan, and 45% for both Yemen and Bangladesh. This rate is about 18% for Iran.

One can surmise that the share of population living below poverty line should be very low for a rich country like the US or really high for the poor nations. Well, it is not necessarily so. This rate, for example, is currently 12% for the US simply because income distribution is fairly inequitable in this country. On the contrary, for a poor country with low per capita income, like Syria, the same rate is relatively low, 12%. This is either due to reasonably even distribution of income or because of statistical inaccuracies.

Often, economists use the combined rates of unemployment and inflation for specific year, known as the misery index, to gauge the level of economic well being for a country or for international comparison. The lower is this index, the better is economic condition. Rising index, on the other hand, represents economic down turn. The misery index of more than 10% is considered unacceptable for the United States. For the past 15 years, the misery index has been around 9% for the U. S. economy in average despite the gloomy economic condition during past eight years. The misery index, the sum of unemployment and inflation rates, for the major Muslim countries is ranging from 57% for Afghanistan, 58% for Iraq, 46% for Yemen, and 17% for morocco. This rate stands at 27% for our country. One must also be mindful that all economic statistics in these are published by government and are subject to manipulation and window dressing.

Lagging behind industrialized nations in production of manufacturing products and services, the Muslim countries have to rely on export of oil, raw materials, and basic agricultural products as the primary source of revenues. The total value of exports by the selects Muslim countries is nearly $708 billions a year including the vast amount of money from oil exports. This number is about 50% of the value of the Germany’s total exports, and is almost equal to the value of annual exports of Japan alone. There is evidently no feasible way to calculate the value of the non-oil exports for all the oil-exporting Muslim countries in our sample because they do not publish any relevant reliable data. However, according to a research conducted by some Arab scholars, the total value of non-oil exports by the entire Arab countries is less than the value of exports by the tiny country of Finland!

Another relied-upon criterion for international comparison is a well respected index created jointly by Heritage foundation and the Wall Street Journal called the Index of Economic Freedom, IEF. It is a composite index designed to compares and rank 162 countries in the world using 10 different measures of freedom including; the extend of free trade, business freedom, the degree of government involvement in the economy, respect for private rights and properties, etc. The index tries to underscore the link between opportunities and various measures of economic success. The observed consequences show a significant positive link between this index and the major indicators of economic prosperity such as per capita income, level of employment, and the stability of exchange rate – value of currency. Not surprisingly, because of low level of economic and social freedom in Muslim countries, they usually ranked at the bottom of the IEF list.

Regrettably, Iran has the lowest rank even among Muslim countries according to 2008 index. It is positioned at the bottom of the list, 151st among 162 countries, preceded by Bangladesh which is ranked 149th, Syria 144th, Uzbekistan 130th, Yemen 125th, Indonesia 119th, and Algeria 102nd. All the other countries in my sample have similarly low rank. Surprisingly, Saudi Arabia has the highest rank among the selected nations in our sample when it comes to economic and political freedom. It is also ranked, 60th, among all the 162 countries in IEF list. Try to explain that to Michael Moore!

These painful facts and figures may lead us automatically to believe that Islam is the main culprit. Whereas such idea may have some validity, we should be wary of hasty conclusions and look deeply into this issue from the angle of impartiality. Here are some relevant questions: Does economic deprivation in Muslim countries have anything to do with Islam and its teachings? Is there a cause and effect relationship between Islam and economic backwardness, or it is simply a historical coincidence that Muslim countries are poor. And, more importantly, what at are the possible explanations for depressing economic condition in Muslim countries?

To address these and similar issues, we must first examine the forces responsible for economic advancement in developed courtiers and why such forces are either weak or absent in Muslim countries. We must also understand that economic development does not happen over night. It is an evolutionary process that requires persistent, concerted, and coordinated efforts by both private sector and the government aided by technology, high-quality labor force and capital, sophisticated physical and financial infrastructures, well-functioning communications and transportation networks, and a multitude of other factors. However, I would like to focus on a few other factors that I believe are more relevant to the Muslim nations>>> Part 2

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