WEALTH OR CURSE

Oil is the wealth and also the curse of the Middle East, Discuss.

Oil is the wealth and also the curse of the Middle East, Discuss.

Introduction

Oil discovery has stipulated wealth into many nations, but it has its far reaching effects on the people. According to Transparency International, the oil producing nations the Middle East are among the world's 30 most problematic when it comes to corruption. Non-governmental organizations have reported that even in nations which recently discovered oil corruption has begun to make itself felt and "the government is not accountable to the people” on revenues that are being generated by oil . The Middle East has 65% of proven world oil reserves. Some States have producers which are known for relatively intelligent oil resources, although the vast majority is ruled by authoritarian regimes and for which the word 'transparency' has great significance. Being the state the sole owner of the oil revenues, the economic system works only to recycle these revenues, which does not favor the emergence of an entrepreneurial class. Furthermore, it is an industry that faces competition, which also makes it unnecessary to improve productivity. With all this, countries like the UAE have used oil revenues to build a network infrastructure - airports, ports, roads and housing, sometimes taken to the extreme of a truly luxury of Arabia - and to make the region a center of tourism, trade, technology and industry. Today, oil accounts for only 7% of the GDP of Dubai and the economy grows 16% per year. The following paper discusses the phenomenon that oil is the curst and wealth of many Middle Eastern countries.

Discussion

Oil - A blessing

Oil has been the main driver of the development of modern economies, but their abundance is not enough to achieve great economic and substantially improve living standards. Shortly before its collapse, the Soviet Union was the world's largest producer of oil and natural gas, but its economic performance was poor and the entry of the Soviets was just a fraction of the income of the Germans and French, even though they had to import all the oil and natural gas they needed (West, 2013, n.d).

In most of the members of the Organization of Petroleum Exporting Countries (OPEC), the fabulous export earnings over many years have not resulted in significant economic and social progress. History shows that in general the oil-rich countries have not had good economic and oil-poor countries, well managed, have had better performance and higher incomes per capita. The lag of the economic evolution of the oil countries became more pronounced and evident from 1970 when prices soared and multiplied their income (Tetreault, n.d). That's why Juan Pablo Perez Alfonzo, who was in Venezuela's oil minister, described the oil as a curse that causes waste, corruption and excessive consumerism. Time seemed to agree, as the cycles of high prices caused major disruptions in most oil-producing countries. The situation is similar at the political level, in terms of stability of governments and civil institutions, in ...