Marcus Noland is a senior fellow of the Institute of International Economics. Howard Pack is a professor of economics, business, public policy and management at the Wharton School. Messrs. Noland and Pack have collaborated on this interesting policy brief in which they examine the causes of the Middle East’s seemingly intractable economic stagnation. The entire article is outstanding, and here are a few tidbits:

The Middle East is a demographic time bomb. According to the United Nations Development Program?s (UNDP) Arab Human Development Report 2002, the population of the Arab region is expected to increase by around 25 percent between 2000 and 2010 and by 50 to 60 percent by 2020?or by perhaps 150 million people, a figure equivalent to more than two Egypts. Even under the UNDP?s more conservative scenario, Bahrain, Kuwait, Qatar, and the United Arab Emirates will be the only Arab countries in 2020 with median ages
above 30.
These figures suggest that the region as a whole will experience labor force growth of more than 3 percent for the next 15 years or so. On current trends, according to an Arab League report, unemployment in the region could rise from 15 million to 50 million over this period. Under plausible assumptions about the rate of productivity growth and required investment levels, the economies of the region will have to maintain investment rates on the order of 30 percent of GDP and income growth of 5 to 6 percent a year to absorb all this labor. This is a very tall order. And recent history is not reassuring.

The authors contend that pervasive negative attitudes toward foreigners is one of the primary barriers to investment of the foreign capital that the region desperately needs:

In the Zogby (2002) poll of Arab attitudes, Saudi males stand out as uniquely dissatisfied and pessimistic about their children?s future. Presumably these feelings are rooted in the reality of dwindling employment prospects, the 40 percent decline in per capita income from its peak in 1982, and the lack of political voice. Dissatisfaction and pessimism about the future are mildly correlated with age, education attainment, and internet access. The youngest, most advantaged sections of society have the bleakest appraisal of the future. It goes without saying that 15 of the 19 September 11 hijackers were Saudi males.

Less dramatic than terrorist attacks, though perhaps more important for economic development, are public attitudes toward foreigners and globalization.
The 2003 Pew Global Attitudes survey revealed a significant level of discomfort with globalization in the Middle East. . . the percentage responding that globalization is good in three Middle Eastern countries is considerably less than in other regions of the world surveyed . . . The regional pattern of responses to three issues?the necessity of closing large, inefficient factories; the need to protect their way of life against foreign influence; and the desirability of societal acceptance of homosexuality . . . Relative to most respondents in the rest of the world, the Arabs were less willing to close inefficient factories, more committed to protecting the local way of life, and less tolerant of homosexuality.
The picture that emerges from the pattern of responses to the full set of Pew survey questions is of local populations that are relatively averse to change, instead favoring the maintenance of existing economic and social arrangements ? especially if the forces of change are regarded as emanating from foreign or nontraditional sources.

And interestingly, Messrs. Noland and Pack view Islam as only part of a much larger problem:

[C]oncerns manifested through Islam may simply be one symptom of more complex social processes. Islam may matter?not in the simple sense that belief in Allah dooms one to a low personal saving rate or that Islamic banking systems handicap financial efficiency?but rather in a more subtle way. Today there are Muslim communities in the Middle East that are relatively discomfited by aspects of ongoing social change. To the extent that adherence to Islam is a significant component of personal and communal identity, Islamic teachings will be one prism through which these developments are evaluated. This pattern of apprehension may be reinforced if Islam itself is regarded as being part of this contested terrain.
Yet the centrality of religious belief in this formative process should not be overstated. As revealed in the Zogby poll, religious orientation is generally only a secondary or tertiary source of personal identity in most Arab countries in the Middle East?rather Arab ethnicity is the primary identifier. It is almost surely the case that feelings toward foreigners or homosexuals are derived from some admixture of religious teachings and prevailing cultural norms. Religious beliefs are but one input in a complex reaction to globalization.

Again, read the entire brief. Hat tip to Professor Drezner for the link to this informative article.