Re: Muslim world: prospects for future growth
The one thing that has not been discussed much here is security. Economic growth cannot procede under a cloud of violence. It has not ever and will not ever work. To the extent that Muslim countries form a financial bloc to trade within the Muslim world, they will succeed, at least in a limited way. However the remaining 4/5ths of the world will remain largely untapped, so long as there is violence and radical violent politics in Muslim countries.
When five years from now these BRIC countries are far larger and more powerful than today, Muslims will undoubtedy say "Why not us?". Knowing Guppies as I do there will be rampant denial, accusations of racism, and running from blame. Quite simply, Muslims believe that the Western World should simply close its eyes to the upheaval in the Muslim World and keep doing business.
Muslims worldwide must recognize that there is a choice for each Western industrial company. They can build widgets in China or they can build widgets in Pakistan. To the degree security needs add expense or complexity, Pakistan will become less competitive. In my experience most Guppies here deny this is true, wish it were not true, or do not recognize Western fears as legitimate. Turmoil is a millstone around the neck of Muslim countries.
The reality is, most Muslims do not percieve today that there will be economic consequences from todays headlines. For the time being, the lack of growth is masked in higher oil prices that are a windfall to Arab countries. Countries like Pakistan however who are energy consumers are having their economies success masked by one time events. What one time events? First, the lifting of US sanctions related to Nuclear testing were hampering economic growth. Second, one cannot discount the effect of debt relief and aid to the Paksitani economy. Third, tensions have wound down with India. Lastly, Pakistanis pre 9/11 believed that their money was safer overseas than in Pakistani banks (This is true for most Muslim countries, not just Pakistan). Post 9/11 many began to mistrust Western Financial institutions, and feared that thier funds would be caught up in some freezing action related to the US war on terror. The newly repatriated funds caused huge capital inflows to Arab banks, and other countries, and was of course reinvested by the banks. This one time repatriation effect provided a temporary springboard for economic growth. But, just as a one time injection of capital can be good, at some point thing will normalize and there may again be outflows. Today lack of foreign investment is masked by locally available capital, but that is not a lasting effect.