Globalization: challenges and responses in the Arab world

With the second slowest annual growth rates in the world, a lack of investment flowing into the region and issues surrounding freedom, knowledge and women's empowerment, what's gone wrong in the Arab world?

This paper first asks why globalisation should matter. It then considers why globalisation is challenging the Arab world, and how it should respond to this challenge. It then asks what the prospects are for the region, what can be done and what can be learnt from history.

The paper argues that:

• the fact that Arab countries are in danger of being marginalised in the new world environment, should stimulate them to make the necessary reforms and implement the right policies to avoid losing their share in the benefits of growth in the world economy
• valuable opportunities have been squandered over the last three decades, as state monopolies and narrow nationalisms rather than Islamic heritage have brought about dictatorships which have destroyed individual rights and freedom
• the Arab world faces three challenges of liberalisation, modernisation and integration into the world economy, none of which threaten underlying Islamic principles

The paper recommends that:

• to strengthen their position, Arab countries must improve their productive capacity, their information and communication capabilities, their transportation systems and encourage the emergence of more competitive financial markets
• reforms in the financial sector must guarantee that private rent-gatherers do not replace controllers of government monopolies, accountability, transparency and fair competition should become the ruling principles in the system
• investment in higher education and the accumulation of scientific and technical expertise
• investment in labour intensive activities through the reorganisation of vocational training
• improve the systems of governance, such as the rule of law and an independent judiciary, strong and transparent accounting and reporting