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Resource Rich Muslim Countries and Islamic Institutional Reforms

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Liza Mydin, Hossein Askari and Abbas Mirakhor

Resource Rich Muslim Countries and Islamic Institutional Reforms explores the "resource curse," a condition in which a country’s abundance of natural resources is negatively linked with the country’s development and economic growth, in resource rich Muslim countries. The resource curse puzzle has been studied for over twenty years, with prior researchers looking to prove its existence and explore its causes. Recent studies have begun to indicate institutional failure as a likely cause of the curse, as wealth of resources tends to cause counterproductive behaviors such as rent-seeking, patronage and corruption. The subpar economic performance of resource rich Muslim countries in the Organization of the Islamic Cooperation (OIC) could be attributed to the manifestation of a resource curse. Collectively, the member countries of the OIC contribute over 9% of the world’s total GDP with 22.8% of the world’s population. Saudi Arabia and the United Arab Emirates alone contribute about 17% of world oil production. Resource rich Muslim countries should be at the forefront of economic performance and growth, yet we see the opposite when we compare the performance of these countries to countries that are not resource rich (such as Spain, France, Hong Kong and Japan). Through an analysis of sample countries, the authors have discovered that natural resources exert a drag on the countries’ economic growth, thereby indicating the presence of the resource curse. Their research also found weaknesses in the quality of institutions as the cause of the curse. To counteract the negative effects of the resource curse in resource rich Muslim countries, the authors provide a number of Islamic institutional reforms.

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Chapter 6: Policy Assessment: Saudi Arabia, Malaysia and Qatar

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POLICY ASSESSMENT

Saudi Arabia, Malaysia and Qatar

Introduction

We conclude that the OIC oil-producing countries in our study have conducted their affairs in a fool’s world—as if oil prices would stay above $100 per barrel for all time (with little competition from other producers and renewable sources of energy) and that their oil reserves would last forever! In 2016, some may have been awakened from their slumber. As they look ahead, the more populated Muslim countries among the major producers, such as Saudi Arabia and Nigeria, see unsustainable budget deficits, economic stagnation, high unemployment and potentially catastrophic domestic conflict and upheaval. We again restate that the grim economic condition of the OIC oil-producing countries shows that there is now an urgency, more than ever to assess and evaluate current weaknesses in their developmental policies, which require effective institutions at their foundation.

In our previous chapter, we provided recommendations for Islamic institutional reform. Our purpose here is to narrow down and select three countries (Saudi Arabia, Malaysia and Qatar) from our countries in the study and provide a more comprehensive explanation on how these countries have failed and succeeded and how can our recommendations be implemented. In order to do so, we take a more in-depth study on the economic, social and ← 137 | 138 → political effects of oil for these three countries. We examine in greater detail the reasons for the failure in their quality of...

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