Adeel Malik

Beyond the Resource Curse: Rents and Development

This chapter offers a brief critical reflection on the Middle East’s resource curse. The region has typically been described as performing in the middling range, growing neither as well as East Asia nor as badly as sub-Saharan Africa. Arab economies have experienced a modest growth performance with substantial volatility of macroeconomic outcomes. The symptoms appear all too familiar: a weak private sector, unproductive investment in white elephant projects, pervasive rent seeking, and a large and oversized public sector. Government spending (especially on subsidies and public employment) has remained surprisingly resilient in the face of fluctuating oil prices. The relationship between oil and development in the Middle East and North Africa (MENA) is well-documented (Yousef 2004; El Badawi 2005; Nugent and Pesaran 2005). Most of the region’s development challenges have been traced to the pathologies associated with natural resource abundance.