Published by Daily Star on 2003-11-01
Around this time of year, various international and regional think tanks come forth with their rankings of countries, judged mainly by economic performance. Arab countries generally do not tend to fare well in such ratings, mostly because of the political volatility of the Middle East, domestic mismanagement, stifling bureaucracies, and inadequate human and financial capital for sustained economic growth.
Just the other day, for instance, the World Economic Forum issued its much ballyhooed Global Competitiveness Report. The Geneva-based nongovernmental organization--which last spring held a glittering conference of celebrities, economists and businessmen at a Dead Sea resort--ranked some 80 countries. From the Middle East and North Africa, the only countries appearing in the forum's chart were Jordan (number 34), Tunisia (number 38), Egypt (number 58), Turkey (number 65) and Algeria (number 74).
"The Arab world has suffered a 20-year growth slowdown," the report says. Contributing to such anemic growth, it added, were unproductive pubic investments and the hostile local environment for private investment.
These are tired old arguments. This is not to say that the forum's findings should be treated lightly, but its researchers ought to be paying more attention to some Gulf states whose economic performance have made them low-risk investment destinations and therefore among the best nations in the world in terms of capital inflows.
The United Arab Emirates is a case cited by the PRS Group, a well-known US financial and economic rating firm. It was given 81.8 points--out of a possible 100--and just edged out Kuwait and Bahrain, Gulf neighbors that each received 81.0 points. The PRS index rated 140 countries according to their ability to attract foreign capital; it was issued by the Kuwait-based Inter-Arab Investment Guarantee Corporation (IAIGC), which also examined factors such as the ratio of foreign debt to gross domestic product, the ratio of the current account balance to exports, currency stability and import coverage by the country's cash reserves.
"This index is extremely important as it provides a real evaluation of the country's economic and investment situation--it also serves as a platform for decision-makers in their economic and fiscal planning," the IAIGC said.
The high points scored by the Gulf states are testimony enough to their economic strength. But there's one other thing that also needs to be said in their behalf: countries such as the UAE run open economies.
This was underscored in a recent interview given to The Daily Star by Sultan Nasser Al Suwaidi, the widely respected governor of the UAE's central bank. "The most important thing is to have an open economy, and a market base economy, which really depends on the forces of supply and demand," Suwaidi said. "Therefore, we put minimum restrictions on our banks in doing their business. That allows them to really grow and flourish. And it also allows other economic institutions to grow and flourish as well."
The pity is that the mandarins of international finance and business don't listen keenly enough to people like Suwaidi when it comes to making investment decisions. Among the mandarinate--based in financial centers such as New York, London, Frankfurt, Paris and Zurich--there is all too often a tendency to lump together all the countries of the Middle East and North Africa region as too politically risky for large-scale investments.
The fault also lies with the countries themselves, even some of the better performing ones. They need to market themselves better in the international bazaar at a time of tightening global competition for foreign direct investments. Their potential for human and economic development warrants enhanced cooperation with the international financial community.
Senior Writer and Global-Affairs Columnist