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World Bank Reports Oil Exporters Spending Wisely
All across Texas in the 1990s were pickup trucks with bumper stickers that read “Dear Lord, Give me just one more oil boom. I promise not to piss it away this time.” The sentiments, in Arabic, were felt throughout the Middle East. Well, they’ve got another oil boom, and while the news from Texas is unclear, it looks like the nations of the Middle East and North Africa (MENA) aren’t wasting it.
A new World Bank Report says
Compared with previous
oil booms, the region’s oil producers are increasingly demonstrating impressive fiscal restraint. They are building up liquidity, through external reserves, oil stabilization funds, and through paying down debt. They are also pursuing common strategies for diversification of the oil wealth into foreign assets, as a way to transform the finite oil wealth into longer-term revenue streams. They have worked almost in unison to develop trade ties and to encourage greater foreign participation in their economies. With increased prudence, the volatile growth outcomes among oil producers which characterized the 1970s and 1980s have been increasingly supplanted by a common growth effect.
Among the actions worth noting, Saudi Arabia has slashed its domestic debt by almost 50%. Oil wealth has helped cushion the blows of liberalized trade, “In many economies in the region: Algeria, Egypt, Jordan, Lebanon, Morocco, the WBG, Syria, and Tunisia, tariffs have been reduced and non-tariff barriers dismantled with the region’s largest trading partner, the European Union (EU), as part of the EU Association Agreements.”
Ironically, great mineral wealth is often at odds with economic development. Why build infrastructures and develop human capital when money is literally coming up out of the ground? On the other hand, Singapore and Japan are prime examples of countries with few natural resources beyond their own people; they are brilliant examples of development because it was necessary.
The population growth of the MENA nations demands that reasonable jobs exist for the next generation, and with that in mind, efforts at building economies that do not rely entirely on oil are prudent, if not obligatory. In the long run, this is what will defeat Fascislam rather than the First Marine Division.
© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.
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