Why the Middle East Is Economically Underdeveloped
July 3, 2010
Abstract of a scholarly article : Why the Middle East Is Economically Underdeveloped:
Historical Mechanisms of Institutional Stagnation by Timur Kuran, Department of Economics University of Southern California June 10, 2003 from the Forum Series on the Role of Institutions in Promoting Economic Growth:
Executive Summary
A millennium ago the Middle East was not an economic laggard. By the 18th century
it was exhibiting clear signs of economic backwardness. The reason is that certain
components of the region’s legal infrastructure stagnated during a long period when
their Western counterparts were giving way to the modern economy. Among the
institutions that generated evolutionary bottlenecks are the Islamic law of inheritance
(which inhibited capital accumulation), the absence in Islamic law of the concept of a
corporation (which kept civil society weak), and the waqf (which locked vast
resources into unproductive organizations for the delivery of social services). All of
these obstacles to economic development were largely overcome through radical
reforms initiated in the nineteenth century. Nevertheless, traditional Islamic law
remains a factor in the Middle East’s ongoing economic disappointments. The
weaknesses of the region’s private economic sectors and its deficiencies of human
capital are among the lasting consequences of traditional Islamic law.
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