The Puzzle of the Middle East’s
At the start of the second millennium, around the year 1000, a visitor from Italy or China would not have viewed the Middle East as an impoverished, commercially deficient, or organizationally primitive region.1 Although the region might have seemed enigmatic, its oddities would not have painted a picture of general economic inferiority. Now, at the start of the third millennium, it is widely considered an economic laggard, and a plethora of statistics support this consensus. More than half of its firms consider their limited access to electricity, telecommunications, or transport a major obstacle to their business, as against less than a quarter of those in Europe. In the region, life expectancy is 8.5 years shorter than in high-income countries, consisting mainly of North America, western Europe, and parts of East Asia. Its per capita income equals 28 percent of the average for high-income countries. Only three-quarters of the adults in the region are literate, as compared with near-complete literacy in advanced countries (table 1.1).
As of late 1750, the picture was different. Around that time the purchasing power of the average worker in London or Amsterdam was only twice that of the average worker in Istanbul, the largest metropolis and leading commercial hub of the eastern Mediterranean.2 The gap between Middle Eastern and western living subsequently widened, until World War I. Since then aggregate growth has been roughly equal. Measured as a ratio, in the early twentyfirst century the per capita income gap between the West and the Middle East remains what it was a century before.3