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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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ABOUT THE AUTHOR

Liza Mydin holds a PhD in Islamic finance from the International Centre for Education in Islamic Finance (INCEIF), Malaysia, and is currently Head of Research and Advisory at Maybank Islamic, Malaysia. Dr. Mydin was previously in the Global Islamic Finance Advisory Unit of PricewaterhouseCoopers and afterwards joined Al Rajhi Bank Malaysia as Vice President of Compliance in 2010. In 2016, she was a visiting scholar at the George Washington University and was involved in conducting post-doctoral research for the Islamicity Index Project.

Hossein Askari is Iran Professor of International Business and International Affairs at the George Washington University. He served for two-and-a-half years on the executive board of the International Monetary Fund and was Special Advisor to the Minister of Finance of Saudi Arabia. During the mid-1980s, he was the director of the team that developed the first comprehensive domestic, regional and international energy models and plan for Saudi Arabia.

Abbas Mirakhor is a retired Professor of Economics and Finance. He was the first Chair of Islamic Finance at the International Centre for Education in Islamic Finance (INCEIF), Malaysia. Prior to that, he worked at the International Monetary Fund for twenty-four years, where he was a member of the staff, later a member of the executive board and finally Dean of the Executive Board.

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