Posted: April 26th, 2022

Rags and Riches; Countries from the Middle East

Rags and Riches; Countries from the Middle East

Introduction
A country’s GDP is directly proportional to the rate of unemployment. An increase in markets and labor force will lead to growth in the GDP. Regression results in the reverse, unemployment. Educational attainment among women. Okun’s law posits that a 1% drop in the unemployment rate should result in a subsequent 3% increase in GDP. This explains the gap between the richer and poorer countries. The paper looks first at the factors affecting the labour force, then analysis and recommendations are outlined later.
Segregation of Female Labour
Middle East countries today rank lowest in the female labor force participation in the world (World Bank Group, 2015). Countries that have incorporated women into the workforce have a greater labour market and a greater GDP. The culture may be rigid and oppressive to women, limiting their educational standards. In a world that requires skill, such women are left out of growing the economy but instead resort to menial jobs.
Unemployment among the Youth
For schools to have value, the skills obtained should have utility in the labour market. However, a mismatch of skills means high employment. Schools are not equipping the youth for the labour force. There is a huge gap between university education and business skills needed to grow the economy. (Sullivan, Rey and Jorge Mendez)
Governance
Ethnic strife is a big challenge for Yemen (Choksy, 2016). The imperial structure in Qatar, though it has a huge GDP, has made it politically unstable. High unemployment rates make it worse when countries are having governance issues. This greatly affects economic decisions which in turn affects the GDP and employment. A country with high foreign investments will experience a surge in GDP and employment opportunities for its citizens. Issues like corruption also discourage investors because the governing system and labour market may not be effective resulting in losses. This is especially for cronyism which makes the government less efficient by awarding contracts and tenders to incompetent people. The World Economic Forum has often listed corruption as a hindrance to business prosperity in the Arab World (World Economic Forum 2011).
Analysis
Qatar may have less unemployment rate owing to a more vibrant private sector that creates better-paying jobs. This in turn boosts the economy and the GDP. The poorer countries on the other hand have an undeveloped private sector meaningless job opportunities. Last year the World Bank noted that Middle East governments would have to strike a balance between creating socio-economic nets for the people and maintaining financial stability (Eran, 2020). For richer countries, this is easy as they easily will choose financial stability. Their people may not be adversely affected by tough economic times as those in poorer countries.
Conclusion and Recommendation
Growth lies in solving the cultural and systemic issues identified above. Political stability creates incentives for long-term investments which will create more opportunities. People are willing to grow an economy where their businesses have few interruptions. The rule of law is enforced in Qatar. Poorer countries will improve their GDP and lower unemployment rates only by appealing to the world and their people. This can be done by rooting out systemic failures.
References
Anthony O’Sullivan, Marie-Estelle Rey and Jorge Galvez Mendez Opportunities and Challenges in the MENA Region https://www.oecd.org/mena/49036903.pdf
Bernanke, B. S.( 2012). “Recent Developments in the Labor Market.” National Association for Business Economics Annual Conference,
Choksy, J., & Choksy, C. (2016). Unstable, Unruly, And Reprobate: The Middle East Today. World Affairs, 179(1), 58-69.
Eran, O. (2020). (Rep.). Institute for National Security Studies. doi:10.2307/resrep27774
World Bank. (2015). World Bank Middle East And North Africa Region Mena Economic Monitor Towards a New Social Contract. https://www.worldbank.org/en/region/mena/publication/mena-economic-monitor-april- 2015-new-social-contract
World Economic Forum. 2011. The Global Competitiveness Report 2011–2012. Geneva: World Economic Forum.

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