Despite the high oil revenues reaped from hydrocarbon resources and their spillover effects on all oil and non-oil producing countries, most MENA region economies suffer from structural problems and fragile political systems, preventing them from adopting effective politico-economic transformations.
The capital was available, but investments were typically misdirected to form in all cases ‘rentier’ economies, with Arab countries economies remaining very undiversified. They primarily rely on oil and low value-added commodity products such as cement, alumina, fertilisers, and phosphates.
Demographic transitions present a significant challenge: the population increased from 100 million in 1960 to about 400 million in 2011. Sixty per cent are under 25 years old.
Urbanisation had increased from 38 per cent in 1970 to 65 per cent in 2010.
Rural development being not a priority; the increasing rural migration into the cities searching for jobs will put even more strain on all existing undeveloped infrastructures.
Current economic development patterns will increasingly strain the ability of Arab governments to provide decent-paying jobs. For instance, youth unemployment in the region is currently double the world average.
The demand for food, water, housing, education, transportation, electricity, and other municipal services will rise with higher learning institutions proliferating; the quality of education below average does not lead to employment.
Power demand in Saudi Arabia, for example, is rising at a fast rate of over 7 per cent per year.
Amman, Cairo, and other Arab cities gradually lose their agriculture space because of the suburbs’ expansion. Gated communities and high-rise office buildings are sprawling while ignoring low-income housing.
In the meantime, the real world feels the planet is in danger of an environmental collapse; economists increasingly advise putting the planet on its balance sheets. For over a Century of Burning Fossil Fuels, to propel our cars, power our businesses, and keep the lights on in our homes, we never envisioned that we will paying this price.
In effect, a recent economic report on biodiversity indicates that economic practice will have to change because the world is finite.
For decades many have been aware of this reality. However, it is a giant leap forward for current economic thinking to acknowledge that Climate change is a symptom of a larger issue. The threat to life support systems from the plunder and demise of the natural environment is a reality.
Society, some governments, and industry are recognising that climate change can be controlled by replacing fossil fuels with renewable energy, electric cars and reducing emissions from every means of production.
Talking about replacing fossil fuels would mean a potential reduction of the abovementioned revenues.
However, would the spreading of solar farms all over the Sahara desert constitute compensation for the losses?
