Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation
- (pp. 71-90)
(Complimentary)
Abstract
Although a millennium ago the Middle East was not an economic laggard, by the 18th century it exhibited clear signs of economic backwardness. The reason for this transformation is that certain components of the region's legal infrastructure stagnated as their Western counterparts gave 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 and the consequent weaknesses of civil society; 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 weakness of the region's private economic sectors and its human capital deficiency stand among the lasting consequences of traditional Islamic law.Citation
Kuran, Timur. 2004. "Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation." Journal of Economic Perspectives, 18 (3): 71-90. DOI: 10.1257/0895330042162421JEL Classification
- N15 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Asia including Middle East
- O11 Macroeconomic Analyses of Economic Development
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- P40 Other Economic Systems: General
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