Why should resource-based economies diversify?
In the past five decades, the Middle Eastern oil producers have had the least manufacturing and industrial share in their Gross Domestic Product (GDP). Oil and gas nonetheless, continue to account for more than 60 percent of GDP in almost every resource-based economy in the Middle East. However, amid the numerous resource-based economies worldwide, Norway has managed to stand out. It is the singular oil-producer country that has successfully embarked on economic diversification despite its […]
Beyond sectarian politics: Saudi-Iranian relations in prospect.
Iran’s historic nuclear deal with six major world powers was hailed by all parties involved in the negotiating table. But this deal has also raised the question of how Iran’s relations with its neighbors—especially Saudi Arabia—would evolve next. In the past few weeks, Saudi Arabia has joined Israel as a voice of opposition to a deal between Iran and the West. As Thomas Friedman accurately observed, now that Iran has established its own relationship with the […]
Everyone’s Talking About Iran’s Nuclear Program. What About Its Auto Industry?
Every motorized country has a symbolic car that is viewed as the emblem of its thriving auto industry. In Germany it was the Volkswagen; in America, the Cadillac; in South Korea, the Kia; and in Japan, the Toyota. Iran, too, has its own iconic car: the Paykan, which means “arrow.” Based on the defunct British Hillman Hunter, it was first exported to Iran in 1967. The homely Paykan fell far short of the world-class Japanese […]
The East Asian Miracle: Where Did Adam Smith Go Wrong?
To explain economic development, the starting point is often Adam Smith’s The Wealth of Nations, which is taken to explain almost all modern economic growth. The long-standing Smithian paradigm, which posits that the development of trade and the division of labor unfailingly bring about economic growth, continues to provide the dominant foundations of most economic development theories. Smith attributed economic growth to a “natural propensity” in human nature to maximize wealth or what he called […]
Nuclear deal could unleash Iran’s economy
After almost 15 years of intermittent negotiations, Iran and the P5+1 group of six major world powers have reached a framework agreement on Iran’s nuclear program. The deal couldn’t have come soon enough for the Iranian economy, which has been crippled by sanctions imposed by the U.S. and the United Nations. At the same time, state oil revenues are shrinking every day, and unemployment and inflation have soared to levels not seen since the catastrophic […]