Are Arabs, on average, getting poorer?
Issandr El AmraniThe Daily Star - Lebanon's stresses are also the region's:
World Bank data shows that per capita Gross Domestic Product (at constant 2000 prices) for the entire Arab world actually declined from an average of $2,671 for the decade of the 1980s to $2,556 this decade (going even lower to $2035 for the decade of the 1990s in between). In other words, in the last 30 years, the average income or personal wealth of Arabs on average has been simultaneously low, dropping and erratic. For every BMW and Mercedes car you see in Arab capitals there are 50 families you do not see that cannot provide their children with sufficient nutrition, school supplies or heat in winter.
Rami Khouri, presenting five points about the Arab predicament. This one requires further verification but is quite striking. I'd like to see a chart not of average income but of the rate of income growth over the 1950-2010 period, to see whether the acceleration (or deceleration) of the rate of growth of average household income. Of course it might be more meaningful to do this per country than for the whole region.
Update: See this chart and the long comment by Non-Arab Arab below.
Reader Comments (4)
Here is your 50 year chart: http://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG/countries/1W-XQ-EG-SY-MA-IR-SA?display=graph Percent annual GDP growth per capita back to 1961.
I apologize, it's messy. I would have given you a prettier one but that's all I could get out of the World Bank site for an easy URL to paste (though it's an amazing site and you can easily download the data to make easier to read charts).
The main stories though can be seen even in that mess. (1) MENA income growth has been very erratic over the decades. Fast growth and sharp actual decline fluctuating back and forth on oil prices, wars, coups, etc. (2) That volatility has since smoothed out a lot in the past decade and growth rates in general have been at or above the world average. Of course that says nothing about income distribution, but the overall growth rates per capita have looked pretty decent of late. (3) Rami's comparison of the 1980s to now is somewhat deceptive in this regard. The 80s and 90s were particularly bad from the perspective of oil prices and wars. Growth was strongly negative through much of the 80s and the 90s fluctuated but generally were negative to maybe even with world averages. If Rami were to compare this decade to the immediate prior, he'd find a much better picture. In other words, yes a big hole was dug in the 80s and to a lesser extent the 90s, but for the past decade the region (in raw GDP growth per capita terms without getting into the many other legitimate issues of types and distribution of growth to say nothing of political systems) has been improving both in terms of how much growth and steadiness of that growth.
Ultimately I would argue that the sources of that steady new growth come down to several key factors. At the root of it of course is the massive influx of oil rents from a globally changed oil supply-demand picture that should on average stay strong for the foreseeable future. But, there has also been a learning process from prior booms that is resulting in relatively better (I emphasize "relatively" as I fully acknowledge the huge inefficiencies and corruption that remain) use of that new capital in terms of development projects both in the oil rentier states and in regional investment. Second, the dropping of the failed Import Substitution Industrialization (ISI) paradigm which proved so disastrous for so many countries in the post-independence decades. While there's still not a heckuvalota serious world-class manufacturing or services in the region, there is certainly more than there has been in the past, and this is generating more steady growth. Not nearly enough granted yet to employ the vast armies of those hurt by privatization, but enough that one could say if improved and nurtured by sensible policy (a big if obviously when set up against regimes whose first priority is always near term survival and personal enrichment) could become the basis for greater growth in the future. Third, the relative improvement in current account positions of many key regional countries, helping to scale back on the much more numerous balance of payments crises of the past and allow resources to be better deployed for growth instead of debt service. This is obviously related to the oil boom and the money that ends up sloshing around the whole region, but also towards governments/dictatorships balancing their books better and also related towards the 'war on terror' and getting more strategic rents from Washington. Of course, lost in that apparent macroeconomic positive is the fact that much of this has come at the expense of cutting back already woefully inadequate and shoddy services for citizens, leaving people more and more at the mercy not just of the free market, but countries whose education systems don't prepare them for a free market, whose bureaucracies stifle small business development while rewarding top level corrupt sycophants, and whose social safety nets are essentially non-existent beyond some basic cheap bread and electricity when one hits rock bottom (i.e., the regimes will keep people barely alive, but not provide sufficient help or opportunity to let people stand back up when they fall down as the resources to do so are sucked away to the already uber-rich).
My thoughts anyhow.
My thoughts too! Thanks for taking the time to post all that. I suppose one should compare GDP per capita growth with Gini coefficient or some other indicator to get a sense of income distribution too.
This is actually irrelevant. The only relevant issue is RELATIVE wealth, gap between rich and poor, that kind of thing, and it CAN'T just be measured in dollars.
I'll apologize again for the less than perfectly clear graph, but I thought epppie's comment was worth addressing. I looked up GINI index numbers, then thought that rather than an abstract index whose methodology is an issue, why not a straight data series like % of wealth held by the top 20% of the population by wealth. In reality the two charts ended up being quite similar, but here's the 20% chart: http://data.worldbank.org/indicator/SI.DST.05TH.20/countries/1W-EG-US-NO-MA-IR-GB?display=graph
I selected the US, Norway and UK as developed world comparables; and Egypt, Morocco, and Iran as MENA reps. Morocco and Iran come in quite unequal with 45-50% of wealth held by the top 20 percentile. But, there's some interesting comps there too. The US actually ranks up quite close with the latest available data putting them at 46%, close to on par with Morocco. And Egypt actually does better than the US on wealth distribution coming in between 40 and 42%. The UK comes in worse than Egypt as well at 44%. Meanwhile, uber-egalitarian Norway comes in a bit below Egypt at 37%.
I think there's a few lessons to be learned there. First, while distribution clearly does matter, distribution also matters in comparison to overall wealth levels. Anyone taking even a cursory glance at Egypt would know that the "average" Egyptian lives far worse off than the "average" American or Brit even if the wealth disparity between the richest and poorest Egyptian might technically be less. A much larger economy with the same wealth distribution would clearly be a great benefit to Egypt. Or take Morocco or Iran where overall much higher levels of wealth with the same wealth distribution would not make for as egregious feeling inequality as those countries have now. Second, what we can't see on these graphs is the growth rate of wealth/economic well-being by each income strata. That is probably as important as anything and I think is probably getting more at the problem which epppie is pointing at. I would argue that in all but the most extreme cases it is true that a rising economic tide does lift all boats, but if the growth at the lower strata is too slow to be noticeably improving people's hopes for future opportunities, then it isn't enough.