Economies and Islam

Economies and Islam
Muslim states in the greater Middle East and North Africa control much of the world's oil -- but their growth seems stagnant compared with much of the rest of the world. The question is: Why?
By Diane Wolff
Special to the Sentinel

June 26, 2005

In the 21st century's global economy, there are questions about the U.S. ability to retain its dominance, the impact of Europe's confederation on the Continent's competitiveness and how quickly China will become a financial superpower.

Yet, as much of the world focuses on how to win this competition, there is little doubt about who the losers are likely to be.

Despite their control over much of the world's oil supply, the economies of Muslim states in the greater Middle East and North Africa seem to be stalled compared with much of the rest of the world.

The question is why.

Religion does not seem to be the answer because there are some nations with large Muslim populations that are more successful than those in the Middle East. Government priorities and the education system might be the more likely culprits.

India and two Southeast Asian nations, Singapore and Malaysia, have large Muslim populations and have made remarkable economic strides.

Yet Pakistan, which borders India and a small part of China, has made little or no progress. However, it also borders Afghanistan and Iran, two Muslim-dominated nations that have yet to show the ability to compete in the global economy.

India has the second-largest Muslim population in the world. Islam's followers are a 12 percent minority in India -- or about 120 million people, about two-fifths of the population of the United States.

Its neighbor and sworn enemy, Pakistan, has the third-largest Muslim population. Of its 162 million people, 97 percent are followers of Islam.

Yet, India is rivaling China in terms raising its peoples' standard of living, while Pakistan remains mired in the economy of a developing nation.

"China is the world capital of blue-collar manufacturing, while India is the world's white-collar manufacturing capital," says Jairam Ramesh, secretary of the Economic Affairs Department of India's Congress Party.

Chetan Ahya, chief economist for investment banker Morgan Stanley in India, said India had an eye-popping 10.4 percent growth in gross domestic product in the three months ending in December, almost three times the current U.S. rate and roughly similar to the growth China has been experiencing for several years.

Information technology has been the area that has driven India's economic growth, some of which has come through the outsourcing of U.S. jobs. India's information-technology companies reached annual revenues of $12 billion in 2003.

Simply put, the Indian economy has large numbers of skilled workers who perform on a par with Americans and Europeans but for much lower wages. No one outsources to Pakistan because the nation doesn't have the people with the necessary skills, regardless of how cheaply they work.

India has a literacy rate of 60 percent and a per-capita GDP of $2,900. In the past decade, the country has undertaken broad economic reforms aimed at exchanging a socialist mentality for a capitalist one.

Across the heavily fortified border in Pakistan, the economy is agriculture-dependent, the literacy rate is only 45 percent, and the per-capita GDP is $2,100.

Pakistan's lack of political stability has not helped it attract foreign investment of the type that has helped India make great strides. Pakistan is failing economically.

Pakistan has an impoverished population and problems in its educational and health-care systems, not to mention a significant terrorist influence, which it has only begun to deal with.

India is secular in education; Pakistan is religious.

India has emerged as a global player in software exports. Of America's Fortune 500 companies, 220 reportedly outsource their software to India.

Anecdotal evidence suggests that India's Muslims are not fully participating in this boom. Exact statistics are hard to come by, as the government, industry and the educational system claim not to consider religion a factor in admission or employment, so they don't provide such data.

However, Muqtedar Khan, who teaches at Adrian College in Michigan and is a commentator on Indian affairs, said the percentage of graduates from the Indian Institute of Technology who are Muslim is less than the 12 percent share of the overall population. IIT is India's equivalent of the Massachusetts Institute of Technology and turns out more graduate engineers every year than the United States.

There is no affirmative action in India guaranteeing opportunities for minorities. There are separate schools run by Muslims, which many children of that faith attend. There are more highly regarded schools for young Indians of the Hindu majority, which some Muslims also attend, Kahn said.

Separated at birth

After 200 years of British rule, greater India regained its independence in 1947. Pakistan was partitioned, and the new nation, secular but with an Islamic character, came into being.

One country has begun to prosper, although it still has a long way to go to overcome poverty in large parts of the country.

The other hasn't come even that far.

Among India's British legacies are the English language, legal system and civil service. But perhaps Britain's greatest gift was the system of public, secular education that has remained the model to this day.

The economic reforms of the 1990s meant following a broad globalization strategy. India moved its economic base from the agricultural to the services sector. A superior educational system gave India the brain trust it needed to compete.

For the first years of independence, India had a socialist economy and tilted toward the Soviet Union. Beginning in the early 1990s, it instituted major economic reforms that moved the country toward a capitalist economy.

Pakistan's public-education system has endured a meltdown. This accounts for citizens sending their sons to Saudi-sponsored schools to get the only education available to them.

Rather than preparation for jobs in the modern world, children get a reading of the Quran and rote memorization of the Arabic text; the language of Pakistan is Urdu.

Too many graduates of those Saudi-sponsored schools, not prepared to seek employment in the high-tech sector, find themselves fighting a holy war rather than entering the conventional labor market. While Indian students study calculus, Pakistani students are often trained by mullahs who themselves are uneducated in areas other than religious study.

Though Pakistan was secular at partition, dictator Zia ul Haq began placing it under Shariah, Islam's religious law, in 1979.

While India has the world's most-populous democracy, though flawed and cumbersome in some aspects, Pakistan has veered between elected leaders and military dictators for most of its post-independence history.

Success stories

Southeast Asia may have experienced an economic blowout in the late 1990s, but two nations with large Muslim populations have turned in dazzling performances in the global economy.

Singapore, with a population of 4.4 million, is a parliamentary republic that declared its independence from Malaysia in 1965. Its dominant population is Chinese, but about 14 percent of its people are Muslim. The participation of Muslim minorities in Singapore society at all levels has been an objective of government policy.

According to Ng Eng Hen, Singapore's education minister, "The government remains committed in enabling the Malay [Muslim] community to advance in this more-difficult and competitive environment." The proportion of Malay workers who are in the professional, managerial and technical occupations has risen from 11.7 percent in 1990 to 23.4 percent in 2000, he said.

The educational performance of Muslim students has improved at all levels. The percentage of Malaysian students admitted to postsecondary institutions has risen from 40 percent in 1993 to 71 percent in 2002. Singapore has a 93 percent literacy rate. Its per-capita GDP is $23,700.

Malaysia is a post-colonial example of a Muslim-majority state that is succeeding. Formed in 1963 through a federation of the former British colonies of Malaya and Singapore, it has a Parliament, with an unelected upper house and an elected lower house. With a population of 24 million, and 62 percent of the country ages 15 to 64, Malaysia is not a less-developed country but a middle-income country.

It transformed itself from 1971 through the late 1990s from a producer of raw materials to having an emerging multisector economy.

Growth was almost exclusively driven by exports -- particularly electronics. As a result, Malaysia was hit hard by the bust in the information technology sector in 2000 and 2001. It maintains a high foreign-investment rating and is home to a dozen multinational branches of Fortune 500 countries. Malaysia has a literacy rate of 89 percent and a per-capita GDP of $9,000.

Neither Singapore nor Malaysia is a Jeffersonian democracy by a long shot. Both are former British colonies, like India and Pakistan. Both inherited a colonial legacy similar to that of India and Pakistan.

Singapore is a benign authoritarian government that values what its former leader termed "the Asian way": social order over individual expression.

Malaysia has problems with nationalism and extremism. In Malaysia, there is anti-Western feeling among the population. In both countries, Muslims have joined and prosper in the global economic system.

One might argue that these examples suggest that an inherited post-colonial British tradition matters.

Here are two Muslim-minority states, India and Singapore, and two Muslim-majority states, Pakistan and Malaysia. Their experiences indicate that systems matter. The attitude of the government also matters, as in the case of Muslim-minority states such as Singapore and India.

But the attitude of the minority population may matter more, as does how far governments go to promote multiculturalism and advancement for the formerly disadvantaged.

Diane Wolff is the author of two books on Chinese culture. She is a widely published journalist and co-author of a forthcoming terror thriller, Orlando.