Oil Rent and Regional Economic Development in MENA

Abstract

Oil rent has created a regional dynamic in the Middle East and North Africa (MENA) whereby major political developments take place at the regional rather than the single-state level. The Arab Spring was a regional phenomenon, and the entire region is today involved in a regional civil war. The regional dimension of democratic transitions has often been postulated and supported in the literature. In seeking appropriate economic strategies that may support the democratisation process, the regional dimension cannot be forgotten: purely national recipes have little chance of success. Ever since the heyday of pan-Arabism, economic integration within the Arab region has been a recurring theme and objective, but accomplishments remain profoundly disappointing. This chapter reviews findings and the literature concerning the three dimensions of regional integration—merchandise trade, movements of labour and movements of capital—and details the insufficient progress that has been made. It is difficult to envisage a significant improvement in the development prospects of individual Arab countries unless greater success is achieved in pursuing regional integration. At the same time, the implementation of a new regional economic order also requires a new political order. The main difficulty in this respect is that those countries in the region that have the most economic assets and tools—the major Gulf exporters—are ruled by patrimonial monarchies rather than political forces, and their model of governance cannot be exported.