Islamic institutions have many conservative and strict regulations, such as men must grow beards, women must cover their faces when going out, the role of women in society is underestimated, certain foods such as pork are not used, and there is a month of Ramadan fasting in the year. These are great obstacles for countries to invest in this region in particular and the development of Islamic countries in general. Therefore, in many countries, especially in the West and human rights organizations, women's protection, Islam is publicly condemned and criticized. The idea of boycotting the US, an ally of Israel, from extremist Islamic elements is increasing. This wave of boycott is not limited to street protests but has spread to all classes of people with all components ...
2.3 . Natural resources
2.3.1 Petroleum
The Middle East is a region rich in natural resources, especially oil, an important resource that has always played a dominant role in the regional and world economies. It is also oil that has brought these countries rare benefits. More than 65% of the world's oil reserves are located in the Middle East. The economic scale of such an asset is enormous in the modern world. However, it was only since the 1960s when the Organization of the Petroleum Exporting Countries (OPEC) was established and especially after two energy shocks in 1973 and 1979 that the Middle East became an important factor on the world economic and political stage. By the mid-1970s, Kuwait's income from each barrel of oil had increased to 35.5 USD, compared to 2 USD/barrel in 1970. Huge amounts of income from oil sales were put into the international financial system. Oil billionaires began to appear in the region, mainly privileged groups that received priority from the central government in cooperating with foreign oil companies.
Most major countries such as the US, EU, Japan, and China depend on oil resources in the Middle East. Many wars have broken out in this region due to disputes over oil resources and the involvement of major countries. Certainly, in many years to come, Middle East oil will remain an important and complex economic and political issue of regional and global significance.
Table 2: Oil reserves of the Middle East region (2007)
Water
Reserves (billion barrels) | % Worldwide | ||
Saudi Arabia | 264.2 | 21.3 | |
Iran | 138.4 | 11.2 | |
Iraq | 115 | 9.3 | |
Kuwait | 101.5 | 8.2 | |
UAE | 97.8 | 7.9 | |
Cata | 27.4 | 2.2 | |
Oman | 5.6 | 0.5 | |
Syria | 2.5 | 0.2 | |
Yemen | 2.9 | 0.2 | |
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(Source: BP statistical Review of World Energy, June 2008)
According to the World Bank's forecast, the world's oil demand in 2025 will be about 107 million barrels per day. Global oil consumption in the next 20 years will be 30% higher than at present, of which the strongest increase will be in Asia with about 12 million barrels per day, accounting for 50% of the world's oil demand in 2025, especially the demand will increase fastest in China and India. Oil production in non-OPEC countries will begin to decline in 2015, when OPEC countries will be the oil suppliers.
mines mainly for the world, most of which are oil states in the Middle East.
2.3.2 Gas
Along with oil, Middle East gas also occupies an important position on the world's geo-economic-political map. It can be seen that today it has become a powerful weapon if the possessing country uses it effectively. That has been demonstrated through the gas price dispute between Russia and some European countries in the past few years. In the Middle East, by the end of 2007, the total gas production of the region reached about 600 billion m3 , accounting for 18.7% of the global gas production. The total gas reserves of the Middle East are estimated at 100 trillion m3 , accounting for 54% of the total global gas reserves. The countries with the largest gas production in the Middle East are:
Iran, Qatar, UAE, Oman and the countries with the largest gas reserves are Iran, Qatar, Iraq. Recently, with Russia proposing the idea of establishing an OPEC-style gas exporting country organization, which has been supported by Middle Eastern countries such as Qatar and Iran, the role of these countries will certainly be even more important on the world economic and political map.
Table 3: Middle East gas reserves (2007)
Water
Reserves (trillion m 3 ) | % Compared to the world | |
Iran | 27.8 | 15.7 |
Cata | 25.6 | 14.4 |
UAE | 6.09 | 3.4 |
Iraq | 3.17 | 1.8 |
Oman | 0.69 | 0.4 |
Bahrain | 0.49 | 0.3 |
Kuwait | 1.78 | 1.0 |
Syria | 0.29 | 0.2 |
Saudi Arabia
7.17 | 4.0 |
(Source: BP statistical Review of World Energy, June 2008)
2.3.3 Other resources
In addition to oil and gas, the Middle East also has other resources such as bauxite, nickel, iron ore, etc. Steel production in the region averages 20 million tons/year. Iran is the country with the largest steel production capacity with about 7.6 million tons/year, followed by Saudi Arabia and Qatar.
However, these resources are unevenly distributed and clearly do not occupy an important position in the economic and commercial structure of Middle Eastern countries like oil and gas.
II. OVERVIEW OF ECONOMIC AND TRADE DEVELOPMENT OF THE MIDDLE EAST REGION
1. Overview of economic development in the Middle East region
1.1 Improved economic growth rate
Countries in the region have been carrying out economic reforms since the late 1980s, after the oil price crisis caused the region's GDP to decline dramatically. The focus of economic reforms in these countries is to stabilize the macro economy, promote the development of the private economic sector and reform trade. Due to excessive dependence on oil exports, the Middle East economy is generally heavily affected by the fluctuations in oil prices on the world market. After periods of rapid growth in the 1971-1975 and 1979-1981 periods, the economies of the Middle East countries fell into a decline in growth rate when world oil prices fell sharply, starting in 1985. In addition, during these years, the economic growth rate was low due to frequent armed conflicts that affected economic and trade development, typically the Iran-Iraq war and the Israel-Lebanon war.
Table 4: GDP per capita and GDP growth rate in the Middle East (2008)
STT
Water | Average GDP | GDP growth rate | |
1 | Saudi Arabia | 19,345 | 4.2 |
2 | Bahrain | 27,248 | 6.1 |
3 | Cata | 93,204 | 11.2 |
4 | Kuwait | 24,940 | 8.5 |
5 | Jordan | 3,421 | 5.8 |
6 | Iran | 4,732 | 6.5 |
7 | Iraq | 2,989 | 9.8 |
8 | Israel | 28,365 | 3.9 |
9 | Lebanon | 7,617 | 7.0 |
10 | Oman | 18,998 | 6.4 |
11 | Palestine | 6.275 | 0.8 |
12 | Türkiye | 10,472 | 1.5 |
13 | UAE | 54,607 | 7.7 |
14 | Syria | 2,757 | 4.8 |
15 | Yemen | 1182 | 3.2 |
(Source: World Economic Outlook Database, IMF April 2009)
After initial effective reforms, the Middle East economy achieved rapid growth in the 1990s. During the period 1990-2000, the economic growth of the entire region reached 3.1%, including some countries with high growth such as Lebanon 7.2%; Jordan 5.1%; Yemen 5.5%... During the period 2001-2007, the growth rate of the region reached more than 5%, ranking among the fastest growing countries in the world, including countries with quite high growth such as Qatar 8.2%; Iran 6.05%. The rapid growth of this region in recent years is primarily and mainly due to the strong increase in crude oil prices on the world market, making these countries gain large profits from exports. By the second half of 2008, when the economic crisis spread, oil prices had fallen rapidly, but by February 2009 they were still around US$50 a barrel. Another important reason is that recently, countries in the region have adjusted their economic policies.
Macroeconomics, rapid transition to market-based economic development, diversification of production sectors, and increased international trade.
1.2 Economic restructuring
As indicated above, a very recognizable feature is that the Middle East economy relies mainly on the exploitation and export of oil and gas. However, facing the risk of increasing unemployment that negatively affects national security and social balance, Middle Eastern countries have recognized the negative impacts of a model that depends only on natural resources, aid and subsidies, thereby using the national budget more effectively, gradually shifting to a model that reduces dependence on oil, develops other sectors, especially service sectors, reduces monopoly in state-owned enterprises, increases support for the private economic sector, and promotes economic reform towards market mechanisms. Increasing competition in the world market is also requiring the region to develop strategies in labor-intensive industries such as textiles, light industry, etc. Although there have been certain achievements, so far, especially when the world is in a large-scale crisis, Middle Eastern countries have not yet escaped the heavy dependence on oil exports. And this reality will certainly be difficult to resolve in a short time.
Although classified as a developing economy, agriculture currently accounts for a relatively small proportion in the economic structure of Middle Eastern countries, about 10% in 2007. Syria is the country with the highest proportion of agriculture in the region but only at 20%. The countries with the lowest proportion are Jordan: 2% and some GCC countries: 1%. The natural conditions of this region are not favorable for the development of agricultural crops. The scarcity of water resources, the increasingly strong desertification and the lack of investment interest of governments are the main causes.
making the agricultural sector in these countries underdeveloped (except Israel). According to a recent report by the World Bank, each year the water source for agricultural production needs to reach 1000m3 / worker. This level is 8 times higher than the water source that can be provided in the region. The irrigation rate in crops in Jordan is only 30%, Lebanon 39%, Iran 61%. Due to unfavorable conditions, and being blessed by nature with abundant oil resources, most Middle Eastern countries have to import food. In 2007, the whole region exported only 6 billion USD worth of agricultural products (some vegetables, fruits, cotton). While the annual food consumption here is up to 100 million tons, production only meets 40% of the demand. Thus, more than half of the food consumption must be imported. It is noteworthy that during the period 1975-2005, the amount of food produced in the Middle East region increased insignificantly, while the necessary demand increased more than 2 times due to the rapid increase in population.
Industry and services are the most developed sectors in the Middle East region. In the GDP structure in 2007, industry accounted for 42.8%; services accounted for 46.7%. However, most of the industries and services in this region are related to the production, exploitation and processing of oil, some other minerals, tourism and financial services ... In the economic structure in general and the export structure in particular, from the 1980s to the present, this region has always depended on oil exports. In 1978, exports of fuel and related products accounted for 94% of the exports of Middle Eastern countries. In 2007, that ratio decreased but still accounted for 82%. During the period 1980-1988, the Middle East's non-oil exports grew at 9.8%, during the period 1988-1995 it was 9.4% and during the period 1995-2005 it decreased to 2.6%. The over-dependence on the production and export of oil and gas and the habit of relying on these resources has limited the diversification of products in this region.
Table 5: GDP structure of the Middle East region (%)
1999 | 2003 | 2007 | |
GDP growth | 1.7 | 5.1 | 5.7 |
Agriculture | 12.0 | 10.8 | 10.5 |
Industrial | 38.0 | 41.2 | 42.8 |
Service | 50 | 48 | 46.7 |
(Source : WB, MENA 2008 Economic Developments and Prospects)
As mentioned above, although most Middle Eastern countries have carried out economic reforms since the 1980s, these structural reforms have mainly focused on privatization and trade policy reform. The structure of the sectors in the economy has hardly changed, but the results have been quite clear, although in each country and each group of countries, the reform achievements are different. For the group of resource-poor countries, economic reforms in Jordan are assessed to have taken place early, synchronously and relatively sustainably. In response to external shocks related to the decline in oil prices, Jordan began a macroeconomic stabilization program and a structural reform program in the period 1984-1989, including trade reform and financial reform. In the mid-1990s, Jordan continued its trade reform program, promoting the privatization of state-owned enterprises, facilitating the development of the private economic sector, giving incentives to small and medium-sized enterprises ... The policies were introduced to further develop the trade sector, stabilize the macro-economy, and improve the efficiency of the entire economy. Among this group of countries, Lebanon proved to be the country that failed to complete the proposed economic reforms. 15 years of war and civil conflict (1975-1990) virtually destroyed the entire infrastructure system, economy and institutions of this country. Lebanon only really started to carry out economic reforms since 2000 to reduce the budget deficit, reduce debt, and reduce obstacles to trade activities.