Abstract: Economic reforms in the Middle East were a tough challenge. The Middle East countries were called "Global Losers" because of their lack of growth compared to Asian and Latin American economies. Economic reforms were undertaken to reverse this negative economic trend. USA, IMF and World Bank played an important role in initiating reforms in the Middle East. Egypt Jordan and Saudi Arabia were among the major Middle East countries to implement economic reforms.
Economic reform in the Middle East has been one of the toughest challenges faced y the Governments of those countries. The region which was once a major economic force in the world didn't experience much economic growth after the 1980s. While the Asian Latin American and even some African countries grew significantly after implementation of economic reforms, the Middle East countries could not register much economic growth due to failure to adopt proper reform measures. Economic stagnation, growing unemployment and poverty and paucity of investments characterized the Middle East economies post 1980s. Moreover the Middle East economies were further affected y the gulf war during the early 1990s. Economists started calling this area the "Global Losers".
Role of USA, World Bank and IMF in economic reforms in the Middle East
It was realized that in order to reverse the economic trends in this region and to bring about economic growth, economic reforms needed to be undertaken. Efforts ere initiated by the International Monetary Fund (IMF) and World Bank. Role of the private sector was emphasized with the objective of attracting investments. Liberalization of trade was another key focus area. The United State also played an important and persuasive role in the comic reforms in Middle East nations. The "Washington Consensus" was an important initiative in this regard. It focused on -
Controlling inflation.
Deregulation.
Withdrawal of price control measures.
Middle East Free Trade Area (MEFTA) Initiative
In 2003, the Middle East Free Trade Area (MEFTA) Initiative was undertaken. The objective of this program was to support and augment the process of economic reforms in the Middle East. The following initiatives were undertaken under MEFTA.
The United States of America set up Free Trade Agreements (FTAs) with a number of Middle East countries.
Assistance was provided o the countries implementing economic reforms.
Bilateral Investment Treaties (BITs) were signed with several Middle East countries like Egypt, Jordan, Lebanon, Tunisia, Algeria, etc.
Middle East countries were able to apply for accession to the World Trade Organization (WTO) which would help them to real the benefits of open markets.
Economic reforms in major Middle East countries
Some of the major Middle East countries to have implemented economic reforms are -
Egypt
Jordan
Saudi Arabia
Economic reforms in Egypt
Egypt undertook economic reforms in 1991. Traditionally a socialist economy characterized by several regulations, the economic reforms in Egypt focused on the role of the private sector. The results were evident with the Egyptian economy registering an average growth rate of 4.9% between 1991 and 2001. Moreover large debts that had accrued on the Egyptian economy were forgiven by the US and the IMF, as incentives, due to successful implementation of economic reforms. This resulted in taking the burden of public debts off the Egyptian economy. Fiscal reforms and reforms in the banking sector also yielded successful results.
Economic reforms in Jordan
In Jordan economic reforms were initiated by an agreement between IMF and Jordan in 1993. The key objectives of the economic reforms in Jordan were -
Reducing public debts
Reducing budget deficits
Controlling inflation
Tax reforms
Credit policy reforms
However a highly growing population and unstable political situation have ben major deterrents to reaping the benefits of economic reforms.
Economic reforms in Saudi Arabia
Saudi Arabia has been a traditionally state-controlled economy. However economic stagnation, huge public debts and population explosion put Saudi Arabia under the pressure to initiate economic reforms. The important reform measures undertaken in Saudi Arabia include -
Privatization
Attracting foreign investment
Opening up capital markets
Accession to World Trade Organization (WTO)
