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Middle East

Economy

As in most less-developed countries, economic development in the Middle East since the mid-19th century has been oriented toward production of cash crops or commodities for overseas markets. In the 19th and early 20th centuries these products were agricultural: cotton from Egypt, silk from Lebanon, and grains of various kinds from Turkey, Iraq, and Syria and its neighbors. Since the mid-20th century the main export commodities have been oil from the countries where it is located, and labor from poorer countries where it is not. Apart from the oil industry, however, the region remains largely undeveloped. It remains a net importer of most commodities, including food.

After political revolutions of the 1950s, a form of state control based on the centrally planned model of the Union of Soviet Socialist Republics (USSR) was imposed on the economies of Egypt, Iraq, Syria, and South Yemen (now part of the Republic of Yemen). The governments of these countries set economic policy and controlled major industries. Large landholdings were broken up and redistributed, while import controls, government-directed foreign exchange rates, and subsidies on essential foodstuffs were also introduced. The Soviet Union became the main supplier of weapons to these countries. Some of this structure remains in place, but with the collapse of the Soviet Union in 1991 and worldwide tendencies toward privatization, forms of Soviet-style government assistance such as food subsidies and easy access to healthcare, education, and welfare has been greatly reduced. Meanwhile, beginning in the 1950s other pro-Western countries such as Iran, Israel, Jordan, and Turkey received financial or technical aid and military supplies from the West

Mining

About 65 percent of the world's petroleum reserves and 26 percent of its natural gas reserves are in Iran, Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates. In 1996 these states produced about 26 percent of the world’s oil and 5 percent of its natural gas. The economies of these countries depend almost entirely on these reserves. Petroleum mining and related industries also dominate the economies of Bahrain, Qatar, and Oman, all of which have smaller but still significant reserves. Small populations and the absence of resources besides oil limit the capacity of some states to diversify. Only Iran and Iraq have large populations and significant agricultural resources, and the economies of both states have been ravaged by a combination of foreign wars and internal economic mismanagement.

Manufacturing

The lack of raw materials and the small size of local and regional markets have inhibited the growth of manufacturing in the Middle East. However, some Middle Eastern countries have manufacturing sectors that contribute significantly to their economies. Examples are Egypt and Turkey, whose manufactures include textiles, processed foods, and chemicals. In the oil states petrochemicals make up a significant part of the manufacturing sector, but most Middle Eastern oil is still exported as crude.

Agriculture

Although agriculture dominated the regional economy until the 1950s, the Middle East was importing more than half of its food requirements by the early 1990s. Agriculture remains significant in the economies of Syria, Iraq, Yemen, Iran, Egypt, and Turkey, supplying between 15 and 25 percent of their gross domestic product. These figures do not fully reflect subsistence agricultural activities that engage large portions of the population, especially in poorer countries. Reliance on agricultural imports is a result of many factors, including high population growth, rural-to-urban migration (which reduced the number of farmers), and development strategies of the 1960s and 1970s that focused on heavy industry rather than agriculture.

 
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