Why is Middle East so important to world trade?
The Middle East, Northern Africa and the Arab peninsula, which are considered as sacred for Muslims and have 60% of the world oil reserves, have been the focal point for all world countries throughout the history.
The region is a geographical area with an economic structure which is still standing despite the fact that it has seen many wars, battles of religion, and ethnic conflicts since the Hazrat Adam (A.S), the father of mankind.
Therefore, the continuity of the oil reserves, which keep the economy alive, keeps the trade in the region alive, as well.
HISTORY
Open markets and trade have a long lineage in this part of the world. For centuries, the Middle East was the world’s preeminent bazaar, a region renowned for commercial prowess.
Throughout the Middle Ages, the eastern and western Mediterranean were linked by a network of trade. According to a 1453 report by a Catalonian merchant from Eastern Spain, this region was “the head and principal of all commerce,” the heart and soul of the world’s economy.
The region at the center of this trade was named the Levant by Europeans, from the Latin verb meaning “to rise,” referring to the point where the sun rises in the east. The “Levant trade” described the rising flow of goods and ideas between Europe and Lebanon, Egypt, Syria, Turkey, Jordan, and Persia.
Long before oil was a valued commodity, the Levant trade was the source of much of the Middle East’s wealth.
European merchants imported spices, dyes, sugar, pearls, and precious stones from the Middle East. Silk from Persia and the shores of the Caspian was carried to the kingdoms and principalities of Europe via a “silk road” that stretched west to the Atlantic Ocean and east to China. The caravan-serais sprinkled across the deserts not far from here—and the majestic ruins of Petra—stand in testament to the vitality and practicality of this trade.
Medieval Europe depended on this region for many materials. Alum, used in dying fabrics, came from Turkey, Syria, and Egypt. Potash, used for making soap and glass, was drawn from Syria. The Levantine trade was valuable and varied: wheat; furs; pitch; rugs; wax; caviar; and many other goods flowed east and west in a continual stream of commerce.
CURRENT SITUATION
The Middle East of today is rich in human capital and, once freed from the weight of bureaucracy, is quick to revive its traditions of free and open commerce.
The new merchants of the Middle East have an extended journey to travel. The Middle East’s share of international trade and foreign direct investment is among the lowest in the world.
According to the United Nations, the Middle East attracted just 0.7 percent of global foreign direct investment throughout the 1990s. Exports from the region—over 70 percent of which are accounted for by oil and oil-related products—grew at 1.5 percent per year over the same period, far below a global average growth rate of 6 percent. On a per capita basis, exports are significantly lower today than 20 years ago.
U.S. trade patterns reflect the Middle East’s detachment from full participation in the global economy. The United States imports almost twice as much from Hong Kong as it draws in non-oil goods and farm products from the 22 members of the Arab League and Afghanistan combined.
This economic autarky has consigned tens of millions to unemployment and poverty. According to the World Bank, about 25 percent of people in the region live on less than $2 per day. The UN reports that Arab countries have the world’s lowest percentage of people who use the Internet or have access to a computer.
JORDAN AND MIDDLE EAST TRADE
Jordan is leading by example: It has invested in health and education, strengthened property rights, freed the private sector from government strictures, trimmed regulations, and pursued sound monetary policies. Jordan also joined hands with the United States through a comprehensive free trade agreement, which has helped speed economic progress.
Jordan is now outpacing its neighbors—and much of the world—by leveraging trade to create growth and opportunity. The economy has expanded by more than 4 percent annually over the past several years, sparked by both internal reforms and greater exports to the United States. Since signing the U.S.-Jordan Free Trade Agreement in 2000, Jordan’s sales to U.S. customers have expanded nearly 13-fold, from $31 million to $389 million. Last year alone, Jordan’s exports to the United States grew by 72 percent. That increase is especially impressive considering that during the same year exports from the Middle East to the United States dropped by 9 percent.
MOROCCO AND MIDDLE EAST TRADE
Morocco has distinguished itself as an engine of pro-market, democratic reform in the Mahgreb. It has liberalized its telecommunications sector and strengthened intellectual property protections. Morocco is moving to allow 100 percent foreign ownership in key service sectors such as insurance. It has launched an initiative to streamline investment procedures and eliminate barriers to foreign and domestic investment.
BAHRAIN AND MIDDLE EAST TRADE
Bahrain is the Persian Gulf’s first post-oil economy.
As its oil production has declined, growth in manufacturing and services have kept real GDP rising at between 4 and 5 percent for the past three years. Bahrain has cut tariffs, improved property rights, strengthened copyright and patent laws, and created an open environment for eCommerce.
