What unifies the seemingly disparate economies of the GCC, Iraq, Egypt, Jordan?
Is there a theory of everything for Mideast political economy?
Turns out there is: all these countries rely on rents – income earned with little work
1/6
Is there a theory of everything for Mideast political economy?
Turns out there is: all these countries rely on rents – income earned with little work
1/6
What are rents? They’re income that satisfies 3 conditions:
1. The source is external
2. Doesn’t require much work to generate it
3. The government is the main recipient of the earnings
An example for individuals: rents from real estate
2/6
1. The source is external
2. Doesn’t require much work to generate it
3. The government is the main recipient of the earnings
An example for individuals: rents from real estate
2/6
On a state level, the classic example of rents is oil & gas
Energy is the main source of export and govt revenue in the GCC & Iraq
And only a fraction of the labour force works on extracting fossil fuels
3/6
Energy is the main source of export and govt revenue in the GCC & Iraq
And only a fraction of the labour force works on extracting fossil fuels
3/6
Jordan has the same ingredients that landed Egypt & Lebanon in crisis, but it hasn't faced one itself
Reason? Aid from the GCC, IMF, the US
Foreign aid meets all the criteria for rent:
- External money
- Going to the government
- For minimal work
4/6
x.com
Reason? Aid from the GCC, IMF, the US
Foreign aid meets all the criteria for rent:
- External money
- Going to the government
- For minimal work
4/6
x.com
Egypt has moved from one source of rent to another
Starting with oil & the Suez Canal before its recent disruption
Recently, Cairo discovered a new source of rent: the land sale of Ras El-Hekma
Again: foreign money, going to the government, for little labour
5/6
Starting with oil & the Suez Canal before its recent disruption
Recently, Cairo discovered a new source of rent: the land sale of Ras El-Hekma
Again: foreign money, going to the government, for little labour
5/6
Rents are appealing: who’s against earning money with little effort?
But have drawbacks:
- Income can be volatile (oil, Suez)
- Detrimental to productivity
- Authoritarianism: when a govt doesn’t need to tax people, it tends to do away without their representation
6/6
But have drawbacks:
- Income can be volatile (oil, Suez)
- Detrimental to productivity
- Authoritarianism: when a govt doesn’t need to tax people, it tends to do away without their representation
6/6
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