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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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Foreword (Latifah Merican Cheong)

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FOREWORD

Latifah Merican Cheong

There have been numerous studies on the resource curse. This book is a first on this subject from a new perspective and focus of the resource curse in Muslim countries endowed with natural resources. The authors have done extensive economic analysis to trace the developments in the commodities-rich Muslim countries and provide the evidence-based explanations for their rather inferior economic performance. In many Muslim countries, the unfortunate loss of opportunities to gain economically has indeed been due to presence of oil, the major resource curse. The more innovative aspect of the analysis of the resource curse in these Muslim majority countries is the attribution of poor governance and institutional failure as key factors causing the severe lag in economic performance.

The other innovation in the book is the study of the resource curse from an Islamic lens. Would application of the fundamental Islamic principles of justice and equal distribution of resource benefits been able to reverse the resource curse? This book provides an illuminating understanding of the Qur’an that the gatekeepers of countries endowed with resources are duty bound to exercise the highest standards of morality and good governance to ensure fair distribution of the benefits from the resources gift from God to the population. This analysis of the impact of poor governance on managing ← xi | xii → resources is timely at this time when there is a global momentum to put in place good governance across the...

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