Countries of the Middle East and North Africa (MENA) were well placed economically to take advantage of the surge of globalization that commenced some twenty years before the Cold War's end further accelerated its pace. World merchandise exports as a percentage of global GDP rose from 7 percent in 1950 (as compared to 8.7 percent at the end of the last great wave of globalization in 1913) to 11 percent in the early 1970s, 17 percent in 1995, and 26 percent in 2008. In the 1960s the MENA was the most rapidly developing region of the then “third world,” appearing poised to ride the gathering wave of globalization destined to transform that “third world” into the much wealthier “emerging economies” of the twenty-first century.
Alas, in the event most MENA countries failed to take adequate advantage of opportunities afforded by accelerating international movements of capital, goods, and people. Hesitant to transform their inward-looking, state-dominated economies into outward-oriented ones in which private sectors would serve as the engines of growth, MENA countries began to fall behind more rapidly growing competitors elsewhere in the developing world. As the 1970s progressed, downward pressure on per capita growth rates in the MENA, temporarily revitalized by the first oil boom in the wake of the 1973 Arab-Israeli war, was intensified by rapidly growing populations. The second oil boom that accompanied the 1979 Iranian revolution similarly temporarily slowed but failed to halt the downward economic trajectory, which for most countries of the region began to reach crisis proportions by the latter half of the 1980s. In a quarter of a century, during which time the Middle East became the epicenter of the new global energy economy, many MENA countries had slid from the cutting to the trailing edge of third world development.