The Economic Potential of the Arab Countries

Projects and compares the domestic economic development of seven Arab countries to 1985 on alternative assumptions of 2 and 5 percent increases in oil export revenues. All seven countries should grow rapidly if the oil-rich subsidize the oil-poor, but not as rapidly as they hope. Relative disparities will remain and occasionally increase. Saudi Arabia and Kuwait will carry the military expenditure burden. Foreign asset accumulation will continue, but will decline, and may eventually disappear. Saudi Arabia will eventually have to modify its development plans and reduce construction and imported labor. Kuwait should grow at a modest rate and have no foreign exchange problems. Iraq is an enigma, so estimates are highly speculative. Libya's proceeds are committed to outpayments. Its prospects depend on its ability to increase production, to economize, and to renegotiate loans. Egypt's situation depends heavily on peace. Syria's growth rate should continue at its present pace especially if it can develop its oil industry. Jordan will be limited by inflation and labor shortages.