SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Harvard University Department of Economics Econ 970: ECONOMICS OF THE MIDDLE EAST INSTRUCTOR: Tally Zingher tzingher@law.harvard.edu tally_zingher@ksg04.harvard.edu (917)297-7276 (cell) OFFICE HOURS: Appointments as scheduled. I encourage you to e-mail me or set up a time to meet with me with any questions regarding the readings, your assignments or the course in general. E-MAIL OFFICE HOURS: TBD. There will be several hours scheduled per week in which I will reply to e-mails. This way, you don't need to worry that I didn't receive your e-mail and can assume that I will reply to you during those regularly scheduled hours. COURSE DESCRIPTION: In an era in which headlines alert us that the combined GDP of the 250 million residents of the Arab world is less than that of Spain, significant US and European resources are devoted to freezing terrorist financing, and Iran announces that it would move funds out of Europe to shield them from potential UN sanctions resulting from Iran's nuclear standoff with the west, there can be little doubt of the importance of understanding the economic realities of life in the Middle East. The Middle East features prominently on the pages of international newspapers and on the agendas of local and international activists. Although the political slogans of the Middle East may be well-known to many, the economic dimensions of the conflict and economic dynamics in the region have been observed by few. This course will examine the role that economics plays in the conflicts and tensions of the Middle East and to what extent economics may be part of the solution. The course seeks to introduce students to economic frameworks that are relevant to our understanding of the modern Middle East using the lens of Policy Analysis and tools of economic development, and to challenge students to apply their knowledge of economics to the region. Recent region -wide growth makes prospects appear strong across the region but hidden in the macro picture of growth is a mosaic of societies plagued by income inequality, limited employment opportunities, rapid population growth and increasing fundamentalism. 1 In this course, we will explore these elements and their implications. The course will begin with a brief exploration of the region's economic history. After the historical introduction, the course will address themes of economic development and issues of movement of goods, capital and people through the region and with the Western world. The last third of the course will raise issues of particular importance in recent times including terrorism, Islamic Finance and economic elements of conflict resolution. 1 World Bank Annual Report SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Students will choose one country to follow throughout the course and will be have the opportunity to represent their country's perspective on the topic of discussion in each class. This course assumes no prior knowledge of the region but a willingness to apply the tools of Ec 10, Ec 1010 or Ec 1011 to the region and a curiosity about a region transformed from a cradle of civilization to a source of tension and policy challenges. What This Course is Not: This course is not about the latest political debate on who did what to whom in the Middle East. We will not be debating (nor asking) issues such as should the US have invaded Iraq? Who is "right" in the Israeli-Palestinian Peace Process? Should Syria withdraw from Lebanon? Did Syria withdraw from Lebanon? What should the US do if Iran has nukes? economic interpretations of the effects of these issues, however, are welcome. QUANTITATIVE LEVEL: 1 READINGS: Unfortunately, there is no textbook which fully meets the needs of a course like ours. Therefore, most of the readings will be available through the Harvard E-Resources or online through the course website. I do, however, expect you to purchase or access via reserves in Lamont the following text, from which we will be doing many background readings: Richards and Waterbury, A Political Economy of the Middle East, (2nd edition), Boulder: Westview, 1996. A note about the readings: As you will see, the readings for the first section of the class provide background so that we can all have common reference points in analyzing the economics of the Middle East. This means that readings are more dense and perhaps dry for the first few sessions but will become more diverse (and shorter) as the course progresses. ASSIGNMENTS AND GRADING: Assignments are due at the time mentioned in the syllabus. Late papers will be graded down by 1/3 of a grade. (B to B-). Failure to attend a class will count as 2 late days (2/3 of a grade from B+ to B-) for your class participation grade. Grading will be based on: 1. Class participation (35%) 2. Response Papers (20%) 3. Empirical Exercise (15%) 4. Final Paper (35%) A. Proposal (5%) B. Outline and Student-Led Discussion (10%) C. Final Paper (20%) SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East 1. Class Participation: (35%) a. Student participation is essential in the sophomore tutorial. Attendance is mandatory. Students are expected to read the assigned material before each class and to come to class with questions and comments. Students will be rewarded (in terms of intellectual growth and grading) for their engagement with one another. Your daily participation on the panel relating to your country will count towards class participation. Sometimes, you will have a specific perspective within your country (ex. you country's Ministry of Finance or a large trade association within your country), other times, you will simply be expected to have thought about the readings from the perspective of your country. b. Country Presentations: (3-4 pages) Please post your 3-4 page summary document to the class website by 11pm before Class #4. Based on the class readings and discussions of classes 1-3, each student will select one country to follow throughout the course and on which to base the empirical exercise and final paper (contingent on availability of data). In Class #4, each student will present basic background information on his/her country. From here on out, the country you choose will be referred to as "your country." During Class #4, each student will lead a 5-10 minute presentation in class. The purpose of your presentation is to introduce your classmates to your country and provide the foundation of your future class participation representing your country. You may bring handouts for your classmates so that they have a reference sheet of relevant information for future discussions. Note that this is not intended to be an in-depth research report. Rather, it is an opportunity for you to begin exploring your country and set the framework for your classmates in understanding the countries in the region. Your presentation should cover the following topics about your country: 1. Short history of your country: When did it achieve independence? Is it a former colony? What was its historic political or economic identity? What has been the role of your country in the region (ex. crossroads, seat of power, etc.)? 2. Current snapshot: What kind of government runs the country (ex. parliamentary system, democracy, dictatorship)? Does your country have a state religion? What is your sense of the power of religion in your country? Who holds political power in your country? 3. Economic snapshot: What is your country's population? GDP? GDP/capita? General allocation of your country's national budget (military, public sector employment)? Unemployment rate? Strongest economic sectors? Who holds economic power in your country? 4. Other relevant data: What are fertility levels in your country? Do different minority groups have different fertility levels? What is education access like in your country? 5. Data availability: What sources of data are available for your country? (Note that this will help you get a sense of whether or not this country will be a good country on which to base your empirical exercise. If your country is seriously lacking in data, you may a) change countries; or b) choose a backup country with better data availability for use in class sessions when you are unable to find data on your country. Note that the World Bank website, the Economist Intelligence Unit Reports and CIA World Factbook, as well as Infoprod's country profiles (http://www.infoprod.co.il/) and Columbia SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East University's online Middle East Resources (http://www.columbia.edu/cu/lweb/indiv/mideast /cuvlm/) may be very helpful in finding much of the information necessary for your presentations. 2. Response Papers: (20%) Your Response Papers are due by 7pm the day before class and should be submitted via the class website. You will write 5 response papers over the course of the semester of no more than 2 pages (double-spaced) each. I will bring a calendar to class and students in the class will choose in advance the classes for which they will submit response papers. The response papers do not require outside research. Rather, they should reflect your thinking on the course and your reaction to the materials you have read. The response paper should have the following three sections and may be presented in bullet-point or outline form. 1. Your initial 2 sentence reaction to the subject before doing the readings. 2. The perspective of your country on the material covered by the readings. 3. Your reflections on the readings and interesting questions the reading raises for you. You may choose to address the following questions: What is the importance of the subject to the Middle East? How does or doesn't the author use data to make a convincing argument? What are the author's assumptions? Are the author's assumptions accurate? 3. Empirical Exercise: (8-10 pages) (15%) Due by midnight before Class#11 You are the Middle East desk officer at the US Department of Treasury. Your boss, the Under Secretary of Treasury for International Affairs has come to you, seeking guidance as to income inequality in your country.* Under a lot of criticism from the Media that the US economy is one of the most unequal in the world and that senior US government officials are taking holidays with elites in the Middle East while ignoring the plight of the poor in the region, which, the media claim, are the real source of unrest in the region, the President is supporting your country's Ministry of Finance in pursuing a new poverty alleviation agenda in your country. The administration will be very sensitive to any criticism that the program is an attempt to bring more power to elites in your country. How the aid program affects the average citizen in your country will obviously depend on factors such as goals, design and structure of the program. However, still in the early stages of design and structure of the program, your boss has asked you to begin by analyzing economic inequality within your country. Specifically, the President and your boss have requested a memorandum addressing: "Who are the poor in ______ [insert your country's name], anyway?" Please write a memorandum of 8-10 pages answering the following questions. Please use graphs where helpful and be sure to explain your findings, rather than just display formulas, pictures and numbers. Based on the household survey data of the most recent year available: SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East 1. Derive and graph the Lorenz curve and the Gini coefficient of your country for the most recent year for which data is available. Explain what the Gini coefficient of your country tells us about household income inequality? (20%) 2. How does this compare to the Gini-coefficient in the US and Europe for the same year? (5%) 3. Who experiences poverty in your country? What is driving poverty in your country? Describe the composition of poverty. Along what lines does poverty run (gender, education levels, geography, urban v. rural)? Choose one of these criteria and run a simple regression, using income or wage as your dependent variable and the criteria as your independent variable. Based on the results of your regression, make a statement about how certain characteristics (gender, education, geography, urban v. rural), affects wage. Be sure to state your confidence interval for this effect you have discovered in your regression. If you discovered that there was no statistically significant relationship, please explain why that might be. Specifically you may address questions such as: How does education affect wages? How does experience affect wages? How does belonging to an ethnic or religious minority affect wages? (40%) 4. Some governments have battled income inequality by providing direct money transfers to the poor, others have employed much of the labor force, ensuring a certain wage level for its citizens. What factors contribute to the income inequality that exists in your country? Note that income inequality is not always a bad thing. The Lorenz curve (and Gini-coefficient) can tell who, in a society, holds wealth. Why might we want a large amount of wealth to be in the hands of a few? Is the level of income inequality in your country too high, too low, or just right? Explain why you would advocate for or against policies seeking to lower your country's income inequality. (35%) In the event that you cannot find household survey data for your country, please contact me immediately so that we can address the data availability problem and find another country for which you can conduct the required analysis. *Although the task in this assignment may resemble those that might arise in the International Division of the US Department of Treasury, the title of Middle East desk officer differs slightly from the title of the actual person that would undertake such tasks. 4. Final Paper: (14-16 pages) (35%) You are the Senior Advisor to the Minster of Finance in your country. As part of its Middle East development strategy, the European Union ("EU") has allocated your country the equivalent of 5% of your government budget of 2004. In an attempt to show that Europe is more relaxed that the United States (ex. the EU won't try to tell countries how to govern themselves like the Millenium Challenge Account) and more realistic than the IMF (ex. the EU will not apply conditionality on the funding it provides nor does it expect to get paid in return), the EU is proud to publicly offer you this sum of money without any strings attached and will not impose any agenda. With this large sum of money, you know that you can really do something significant. Please write a 14-16 page memorandum outlining your policy proposal for the use of these funds. The Minister of Finance is very concerned with issues of economic or industrial development, development, political stability, regional stability, having a good relationship with the west and anti-terrorism and is unlikely to endorse your proposal unless you address at least one of these SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East issues. Your memorandum should set forth a proposal for allocating the sum of money and advocate your proposed usage of the funds. The EU is so flexible, that they are even willing to provide the 5% of government budget as foregone EU income. This gives you more flexibility in your policy tools and may mean that you may wish to request benefits such as debt forgiveness from the EU, tariff reduction, etc. In order to help you develop your ideas around the paper, your assignment will be broken up into the following subdivisions: 1. Proposal -2 paragraphs explaining your paper topic and the approach you plan on taking. Due Class 15 2. Draft Outline -3-5 page outline with 1 page bibliography and list of search methods used. Due Class 19 3. In class presentation of paper outline. -TBD 4. Final Paper Due by May 9 ASSIGNMENTS: Class 1 Class Introduction and Introduction to the Middle East. Subject: Discuss aims of the course, review several different maps (historical from ancient times), discuss basic characteristics of the region. Defining the region, physical geography, water, weather, population growth, fertility rates, agrarian change, industrialization, foreign trade, capital flows. Discuss Middle East as a concept, different frames of the region (Levant, MENA, Gulf). Why are Turkey and Israel usually separated from the rest of the region? What do we gain and miss with different framing? Readings/Assignment: Please come prepared with some reflections on what questions of the economics of the Middle East most interest you. Ashfin Molavi, "Dramatic Economic Change will Ease Arab Ailments", The Daily Stay/International Herald Tribune, September 23, 2005. "Challenges of Growth and Globalization in the Middle East and North Africa ", George T. Abed and Hamid R. Davoodi, International Monetary Fund, 2003 http://www.imf.org/external/pubs/ft/med/2003/eng/abed.htm#3 Richards, Alan and John Waterbury, A Political Economy of the Middle East, (2nd edition), (Boulder: Westview, 1996).: 49-55; 63-75 (many of these pages are tables, maps and charts that will serve as reference for discussion and for issues covered later in the course). Optional: Issawi, Charles, The Middle East Economy, Decline and Recovery,Princeton: Markus Wiener, 1995. Chap. 2 -The Middle East in the World Economy, A Long Range Historical View. Class 2 Overview of Economic and Political History of the Middle East (1): Subject: The Cradle of Civilization and the Crossroads of the Ancient World. The structure of the economy under Ottoman and colonial rule. What were the historical trends that shaped the current political structures in the Middle East? What were the trends that shaped the existing economic structures? Goal is to frame the course SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Readings/Assignment: Richards and Waterbury, A Political Economy of the Middle East, (2nd edition), Boulder: Westview, 1996. pp. 9-14 (until end of 2nd full paragraph); 18 (from last full paragraph) -43; pp. 275-308 Kuran, Timur, "Why the Middle East Is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation," Journal of Economic Perspectives, vol. 18, no. 3, Summer 2004, pp. 71-90 Optional: Issawi, Charles (1995) Chap. 1 -The Modern Middle East in the World Context, Chapter 5-Egypt, Iran and Turkey, 1800-1970; Chap.6 -Egypt: Economic Evolution Since 1800 Charles Issawi (1994), “As it was then: studying the Middle Eastern economies in the 1940s.” MEAA Newsletter 5:1. Class 3 Overview of Economic and Political History of the Middle East (2): Subject: The economic and political heritage of the post-colonial and independence era. Etatism, Infitah, Pan-Arabism, National borders and identity. Readings/Assignment: Tarik M. Yousef "Development, Growth and Policy Reform in the Middle East and North Africa since 1950" Journal of Economic Perspectives, Volume 18, No. 3, Summer 2004. p.91-116. "How the Arabs compare: The Arab human development report 2002" The Middle East Quarterly, Fall 2002. Amos Nadan (2003), "Colonial misunderstanding of an efficient peasant institution: land settlement and musha tenure in Palestine, 1921-1947," Journal of Economic and Social History of the Orient, 46:3. http://ezp1.harvard.edu/login?url=http://search.epnet.com/login.aspx?direct=true&db= aph&an=10800288&scope=site Optional: Arab Human Development Report 2004, United Nations Development Program, 2003. http://www.undp.org/rbas/ahdr/(Costs $10 to download but is the most recent version of the study. The 2002 Report is available free of charge via Hollis.) Sorli et. al "Why is there so much conflict in the Middle East", Journal of Conflict Resolution, vol. 49, no. 1, February 2005, pp. 141-65 Class 4 Country Overview Presentations (5 -10 minutes per person) Subject: By this class session, each student should have selected a country to track throughout the semester. Over the next 8 weeks you will be expected to speak on your countries behalf. In the remaining time, we will complete the "History" section and discuss a few short articles about the US and European approaches to the Middle East. Readings/Assignment: Dinmore and R. Khalaf, 2004 "US Offers Scaled-Back Version of Mideast Initiative Draft Plan" The Financial Times , April 26, p.5 Guy Dinmore, 2004 "Middle East reform to top G8 summit agenda" The Financial Times, June 8, p.9 SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East "Advancing Barcelona EU needs a better political return on its Mediterranean aid", The Financial Times, p.14 Steven Weisman and Neil MacFarquhar, 2004, " U.S. Plan for Mideast Reform Draws Ire of Arab Leaders", The New York Times, Feb. 26, p.3 The United States Middle East Partnership Initiative: (Please look around the website and come prepared to discuss) http://mepi.state.gov/; http://mepi.state.gov/c10122.htm *Bring the Aghion paper in the reading assignment for Class 5 to class today so that we can discuss the upcoming reading assignment. Class 5 Introduction to Development Issues in the Middle East Subject: What does development mean? What do we need to know about the Middle East (or any country/region) before pursuing a development strategy? What are the key development issues facing the Middle East? Is growth rate the most important measure of development? The Washington Consensus, Millenium Challenge Account, Conditionality on Corruption. What is the role of informal economies in the Middle East? Readings/Assignment: Philippe Aghion, “Appropriate growth policy: a unifying framework”: http://post.economics.harvard.edu/faculty/aghion/papers/Appropriate_Growth.pdf (2005) (Skip sections 5.1 and 5.2) Commercial Microfinance in Egypt, Case Study World Bank "Global Economic Prospects" Middle East Section p. 34-36 (From "Middle East and North Africa" to top of second column on page 36 "South Asia") http://siteresources.worldbank.org/INTGEP2005/Resources/GEP107053_bk.pdf Optional: "Economic Development in the Middle East", Shachmurove, Yochanan, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, PIER Working Paper Archive, 2004, 38 pages Dani Rodrik "Growth Strategies", October 2004, 33 pages. Ricardo Hausmann, Dani Rodrik, and Andres Velasco, "Growth Diagnostics", March 2005, 25 pages Class 6 Institutions & Fiscal Allocations Subject: What role do institutions play in development? What are some institutions in the Middle East. How does the public sector budget get determined in Middle Eastern states? How do Middle Eastern states vary in their allocation of state resources to service delivery, employment and military? *Empirical Exercise Discussed/Assigned Readings/Assignment: Meon, Pierre-Guillaume; Sekkat, Khalid, "Does the Quality of Institutions Limit the MENA's Integration in the World Economy?", World Economy, vol. 27, no. 9, September SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East 2004, pp. 1475-98 Rodrik 2004, "Industrial Policy for the Twenty-First Century" Kennedy School of Government Faculty Working Papers Series, p.1-p.8 "EU Suspends some Palestinian aid Over Budget", Reuters, Jan 17, 2006. Akiva Eldar, "World Bank Official: Palestinians on Verge of Bankruptcy", January 10, 2006, Ha'aretz http://www.almubadara.org/new/edetails.php?id=392 Optional: Richards and Waterbury, p.173-204. Joel Beinin, 1999, "The Working Class and Peasanty in the Middle East: From Economic Nationalism to Neoliberalism", The Middle East Report Richards and Waterbury, p. 329-345 (skim), p.205-220 Volker Perthes, The Political Economy of Syria under Asad, 1995, chapter 2 Hausmann and Rodrik, 2004, “Economic Development as Self-Discovery” Class 7 Oil (1): The effect of Middle Eastern Oil on Oil-rich countries in the region. Subject: Who are the oil producing countries in the Middle East? What is the effect of oil on a Middle Eastern country's economy? What role does the Middle East play in world oil markets? Effect of oil on the domestic economies, consumption patterns and Dutch disease? Who benefits from the presence of natural resources? Are oil-producing countries more productive than non-oil-producing? OPEC production controls. How does oil affect perceptions of the world economy? (e.g., Effect on Oil-rich countries of China's increased demand). Will oil-reliance have to end at some point? Compare use of oil revenues with that of Norway. Readings/Assignment: Richards and Waterbury, p.14-18 (until end of 3rd full paragraph), p.55-62. HBS Case Study on Saudi Arabia "The World's Number One; Saudi Oil, " The Economist, Nov. 12, 2005. Optional: Matsuyama, K. , 1992, "Agricultural Productivity, Comparative Advantage, and Economic Growth" Journal of Economic Theory, Vol 58, pp.317-334 Jad Mouwad "Saudi Arabia Looks Past Oil in Attempt to Diversity", Dec. 13, 2005. Paul Rivlin "World Oil and Energy Trends: Strategic Implications for the Middle East", Jaffee Center for Strategic Studies, Memorandum No. 57, October 2000, p.10-32 Class 8 Oil (2): The effect of Middle Eastern Oil on Non-Oil-rich countries in the region and on other regions. Subject: How are non-oil economies of the Middle East affected by the oil phenomenon? Non-oilprodducin need to develop other services like financial services to get FX earnings (ex. Lebanon and Jordan) remittances -Are remittances going to the poorest households? (Problem with studies is that remittances aren't allocated randomly). How dependent is the SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East US on Middle Eastern oil? What are the effects and vulnerabilities arising from this dependence? Readings/Assignment: Michael Ross, "Does Oil Hinder Democracy?" World Politics 53 (April 2001), 325-61 "Focus; Markets; IEA; More Investment Needed in Middle East, North Africa," Petroleum Economist, Dec. 1, 2005. "Strong Oil Fuels Boom", The Financial Times, May 1, 2005. Optional: Gad Gilbar "The Middle East Oil Decade and Beyond" Samuel Neaman Institute for Studies in Science and Technology. (1996) Class 9 Poverty and Income Inequality Subject: How do we measure poverty? What are ways of thinking about income inequality? Why is income inequality important? What does income inequality in the Middle East look like? Please Bring the Aghenor, Nabli and Youssef Article Assigned for Class 10 to class so that we can discuss the reading assignment for Class 10. Readings/Assignment: "Poverty in the West Bank and Gaza", World Bank Report Ruth Sinai, "Poverty is the Most Pressing Problem in Israel", Ha'aretz, December 2005. Daniel Doron, "Is Poverty Here to Stay", The Jerusalem Post, May 5, 2005 http://www.danieldoron.com/en/commentary/full/poverty-may-be-here-to-stay "Chewing qat is crucial to most Yemenis, but blamed for country's poverty", The Associated Press, November 30, 2005, Wednesday, BC cycle, International News, 722 words, Paul Garwood, Associated Press Writer, SAN'A, Yemen "Targeting the Poor Beyond Gaza or the West Bank: The Geography of Poverty in the Palestinian Territories", Claus Astrup, Sebastien Dessus, the World Bank, June 2001. Or Richard H. Adams, Jr. and John Page, "Poverty, Inequality and Growth in Selected Middle East and North Africa Countries, 1980–2000", The World Bank, Washington, DC, 17 April 2003. Optional: (might be helpful for Empirical Exercise) "He's Even Stirring Up the Oil Ministry; Iran" , The Economist, Nov. 26, 2005 Cowell, F. Measuring Inequality, Prentice Hall, London, 1995. Chapter 4 and Appendix. Ravallion, M. Poverty Comparisons, Harwood Academic Publishers. Switzerland, 1994 Class 10 Fertility and Labor (1) Subject: What are the factors contributing to unemployment levels in the Middle East? What are governments doing to address unemployment? Remittances, cultures towards work, labor force composition. Gender, black market. Who are the unemployed? How do wages and expectations about work compare across countries in the region? What factors shape SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East unemployment levels? Formal versus informal economy. Do hourly wage measures capture income in the Middle East? What does the large number of youth that are unemployed mean for wage rates? Readings/Assignment: Richards and Waterbury, Chap. 4, Fertility, p.77-102, Fiona Symon, "Fertility rate remains stubbornly high, even among the well-educated", The Financial Times, Dec. 7, 2005, p.8 Agenor, Pierre-Richard; Nabli, Mustapha K; Yousef, Tarik M; Jensen, Henning Tarp, "Labor Market Reforms, Growth, and Unemployment in Labor-Exporting Countries in the Middle East and North Africa" The World Bank, Policy Research Working Paper Series: 3328, 2004 (Selected Parts) Hassan M. Fattah, "Workers, in Arab Emirates, Protest and Win", The New York Times, Sept. 25, 2005. Optional: Lant Pritchett (1994), "Desired Fertility and the Impact of Population Policies", Population and Development Review, Vol. 20, No. 1. Jeffrey Williamson and Tarik M. Yousef (2002), "Demographic transitions and economic performance in the Middle East and North Africa," in Ismail Sirageldin (ed.) Human Capital: Population Economics in the Middle East. (Introduction) Class 11 Labor (2) and Minorities in the Middle Eastern Workforce Subject: What role do minorities and new immigrants play in the Middle Eastern workforce. To what extent is there a wage gap between minority and majority wages in the Middle East? How does military service affect the role of women in the Middle East economy? *Empirical Exercise Due Readings/Assignment: Joshua Angrist "The Palestinian Labor Market Between Gulf War and Autonomy", May 1998, MIT Department of Economics Working Paper Optional: "The Economic Ascent of the Middle East's Religious Minorities: The Role of Islamic Legal Pluralism", Kuran, Timur, Journal of Legal Studies, vol. 33, no. 2, June 2004, pp. 475-515 Unlocking the employment potential in the Middle East and North Africa: Toward a new social contract World Bank, MENA Development Report series. Washington, D.C.: Author, 2004, pp. xxi, 262 Class 12 Education Subject: What kind of access to primary, secondary and post-secondary education exists in the Middle East? How is the state or religion involved in shaping education, education access and University curriculum? Do women have equal access to education? Is there statedriive determination of who goes into what fields. Export of education-who goes where to study and do they return home? Is Brain drain a problem? Technological innovation. Nobel prizes, patents in the Middle East. How do we measure returns to education? SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Readings/Assignment: Farruqh Iqbal, "Increasing Girls' School Enrollment in the Arab Republic of Egypt", World Bank Case Study. Peter Bergen and Swati Pandey, "The Madrassah Myth", The New York Times, June 14, 2005. http://www.newamerica.net/index.cfm?pg=article&DocID=2418 Richards and Waterbury, p.112-133 "College of the North Atlantic-Qatar to Celebrate Grand Opening of New Campus", Al-Bawaba, December 1, 2005 Thursday, 1034 words, Al-Bawaba. Optional: Deon Filmer, Lant Pritchett (1999) , "The Effect of Household Wealth on Educational Attainment: Evidence from 35 Countries", Population and Development Review, Vol. 25, Mar. 1, p.85 "Keeping the Faith", The Economist, January 7, 2006. Michel Beine, Frédéric Docquier and Hillel Rapoport, "Brain Drain and LDCs' Growth: Winners and Losers", Institute for the Study of Labor, Discussion Paper No. 819, July, 2003. Class 13 Private Sector Development (1) Subject: What factors shape the investment climate? A company's willingness to enter the Middle East? (property rights, entrepreneurship, political risk, education) What is a driver of foreign investors coming to invest? How necessary is Foreign Direct Investment (FDI) in the Middle East? How does FDI affect local economies in the Middle East? What are economic tools of war (ex. sanctions)? *Discuss Final Paper Assignment Readings/Assignment: "Groundwork Launched on $26Bn Economic City", The Financial Times, January 18, 2006. Hassan M. Fattah "Young Iranians Follow Dreams to Dubai", The NY Times, Sec.1, Column 1, page 14. "Financial Sector Development in the Middle East and North Africa" Goyal, Rishi; Mobarak, A Mushfiq; Creane, Susan; Sab, Randa, International Monetary Fund, IMF Working Papers: 04/201, 2004, 52 pages (Introduction Section) Optional: Timur Kuran, Private Sector Development: "The Logic of Financial Westernization in the Middle East", Journal of Economic Behavior and Organization, vol. 56, no. 4, April 2005, pp. 593-615. Class 14 Private Sector Development (2) , Foreign investment Subject: Multi-national companies based out of Dubai, tourism. What affects whether countries or cities become hubs for the region? What has been the effect of globalization on the economy, culture? Jordanian expectations to regain status as crossroads of the Middle East SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East post-Iraq war. Readings/Assignment: "Risk Instability and the Pattern of Foreign Direct Investment in the Middle East and North Africa Region," 04/139, 2004, 19 pages Heather Timmons, "HSBC Makes a Showing in the Middle East", The New York Times, December 20, 2005. HBS Case: Venture Capital in Israel: Emergence and Globalization Hewlett-Packard Mulls $50-60M Investment in Israel, Israel Business Arena, November 30, 2005, 583 words, Hadas Manor Optional: "Integration and Fluctuations: The Case of MENA" Hirata, Hideaki; Kim, Sunghyun Henry; Kose, M Ayhan, Emerging Markets Finance and Trade, vol. 40, no. 6, Nov.-Dec. 2004, pp. 48-67. Class 15 Trade (1) Intra-Reigonal Subject: Background on trade. Intra-regional in the Middle East. Why is there so little intra-regional trade? What kind of intra -regional trade is there? Is there intra-regional economic cooperation. What are gains from trade? When do they exist? What are trade patterns in the Middle East? What does membership in the WTO mean for Middle Eastern states? Readings/Assignment: "International Tourism in the Middle East; and Outbound Tourism from Saudi Arabia" Kester, John G C; Carvao, Sandra, Tourism Economics, vol. 10, no. 2, June 2004, pp. 220-40 "The Role of Geography, Culture and Religion in Middle East Trade", in Eial Ben-Ari et. al., eds., Lessons from East Asia for the Development of the Middle East in the Era of Peace, Jerusalem: The Harry S. Truman Institute for the Advancement of Peace, 1998, 208-220. Ephraim Kleiman, "Is There a Secret Arab-Israeli Trade?", Middle East Quarterly, 5:2, June 1998, 11-18. Optional: Understanding the WTO (from WTO Website) http://www.wto.org/english/thewto_e/whatis_e/tif_e/understanding_e.doc Class 16 Trade (2) Extra-Regional Subject: What does/should the Middle East's trade relationship with US & Europe look like? How integrated are Middle Eastern countries into the rest of the world economy? Spillovers of trade, openness? Different approaches to trade as development tools (ex. Free Trade Agreements, Qualified Industrial Zones, Barcelona). Effect of boycotts (US-Libya, US-Iran, Arab Boycott). Readings/Assignment: Dani Rodrik. “How to Make the Trade Regime Work for Development.” (mimeo 2004) http://ksghome.harvard.edu/~drodrik/How%20to%20Make%20Trade%20Work.pdf "Egyptian-Israeli Trade Expected to Rise this Year", Associated Press, December 16, 2005. SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Nicolas Peridy, Towards a New Trade Policy between the USA and Middle-East Countries: Estimating Trade Resistance and Export Potential, World Economy, vol. 28, no. 4, April 2005, pp. 491-518 Optional: Bernard Hoekman and Patrick Messerlin "Harnessing Trade for Development and Growth in the Middle East" Council on Foreign Relations, 2002. p.1-42 Dani Rodrik. “Globalization for Whom?” Harvard Magazine, July-August 2002: Volume 104, Number 6, Page 29-31. Class 17 Currency and Intra-regional Investment Subject: What are the existing currency regimes in the Middle East? Should there be one currency for the Middle East? Which countries should or shouldn't be included? Why? Intraregiiona investment – who is doing it and where? Who should do it and where? Role of the Arab League, Gulf Cooperation Council. The ME is a region in which there are very rich and very poor countries. Do countries in the region have a duty to help each other? Do they have the resources to help each other? Readings/Assignment: "Jordinvest to launch Pan Arab Equity Fund," Al-Bawaba, November 30, 2005 Wednesday, 434 words, By Al-Bawaba Reporters Jeffery A. Frankel. “A Political Economy Survey of Regionalism’s Effect on Global Liberalization,” Regional Trading Blocs in the World System, Chapter 10, Washington, DC.:Institute for International Economics, 1997, pp. 207-228. Ephraim Kleiman "Fiscal Separation with Economic Integration: Israel and the Palestinian Authority", in Assaf Razin and Efraim Sadka, eds., The Economics of Globalization: Policy Perspectives from Public Economics, Cambridge University Press 1999, 246-263. Class 18 Reconstruction, Democratization and State building Experiences Subject: What are measures of democratization? Effect of democratization on economic growth? Trends of Lebanese, Egyptian, Palestinian, Bahraini Democratization efforts? Iraqi economy. How do you assess what an economy needs in the rebuilding stages. Sectors, clusters. Identity, Sense of nationhood? Readings/Assignment: Foote, Christopher, William Block, Keith Crane, Simon Gray, "Economic Policy and Prospects in Iraq" Federal Reserve Bank of Boston, mimeo, April 2004. Linda Bilmes and Joseph Stiglitz, "The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict", January 2006. "USAID seeks to rebuild 10 Iraqi cities", UPI, December 1, 2005 Thursday, 135 words, Washington, Dec. 1 "World Bank OKs first loan to Iraq in over 30 years," Al-Bawaba, November 30, 2005 Wednesday, 418 words, By Al-Bawaba Reporters Democracy in the Arab World, see Daniel Brumberg, “Liberalization versus Democracy: Understanding Arab Political SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Reform,”http://www.ceip.org/files/pdf/wp37.pdf Optional: Braude, Joseph, The New Iraq, Basic Books, 2005 (Economics Chapter) TBD Article on Iraqi, Egyptian or Palestinian Elections TBD Freedom House Democratization Measures Heritage Economic Freedom Measures from Shachmurove (Optional Reading, Class 5) Class 19 Fundamentalism & Terrorism Subject: Is there a trend of fundamentalism in the Middle East? What factions have surfaced? Factionalism within Middle East (Sunni, Shi'a, Druze, Alawites, and other off-shoots). Funding terrorist networks? To what extent do groups identified as terrorist organizations by the United States fill the gaps left by state failures in the Middle East? Who becomes a terrorist? (Is it the simply the uneducated?) What state policies support fundamentalism (ex. ultra-orthodox in Israel and Abu Mazen's states budgetary support for families of suicide bombers)? What economic incentives (schooling, food) do fundamentalist groups provide for those joining their ranks? Readings/Assignment: Berman, Eli, "Hamas, Taliban and the Jewish Underground: An Economist's View of Radical Religious Militias", September 2003. Mishal, Shaul and Avraham Sela, The Palestinian Hamas: Vision Violence and Coexistence, New York: Columbia University Press, 2000, chapter 1: "Social Roots and Institutional Development." Optional: Berman, Eli and Ara Stepanyan, "How Many Radical Islamists? Evidence from Five Countries" (UCSD mimeo.) Class 20 Terrorism and Economics Subject: What links drawn between economics and economic development and terrorism? What does this mean for potential economic development strategies in the Middle East? Terrorist Financing: What is the idea behind freezing terrorist assets? What are the consequences of the War on Terror? Financing of terrorist infrastructure. Who funds terrorist activity? What is the role of informal money changers? What are the costs of the War on Terror? Excluding the direct emotional, physical and financial costs of war, how can we measure the costs of the war on Terror? Opportunity cost of productive activity? Military buildup? Foregone employment opportunities? Visa restrictions? *(20 Minutes) Class Presentations of Papers related to Final Papers Readings/Assignment: United States Department of State List of Background Information on Terrorist Groups http://www.state.gov/s/ct/rls/pgtrpt/2000/2450.htm "Hamas Spends £100K on an Image Make-Over" The Guardian, January 20, 2006, p.17 "Looking in the wrong places -Financing terrorism," The Economist, Oct. 22, 2005 "US victims sue RBoS' NatWest, Credit Agricole for supporting terror groups", AFX SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East News Limited, January 6, 2005. Greg Myre, "Militants, Seeking Jobs and and Aid, Brielfy Seize Offices in Bethlehem", The New York Times, Dec. 20, 2005. Class 21 Recent Economic Reforms in the Middle East Subject: Why and how have governments implemented reform in the face of traditional economic and political dynamics in their countries? What have been some challenges to reform? What have been successful approaches to reform? Who is funding the reforms? Who is paying the price of the reforms? What role should conditionality on reforms play on foreign aid? *(20 Minutes) Class Presentations of Papers related to Final Papers Readings/Assignment: "Bahrain: Labor Reforms Enter Final Phase", InfoProd, December 1, 2005, 134 words Simon Romero, "Qatar Finds its Currency in Natural Gas", The New York Times, December 22, 2005 Raymond Hinnebusch, “The politics of economic liberalization: comparing Egypt & Syria” in Hassan Hakimian & Ziba Moshaver (eds.) The State Global Change: the Political Economy of Transition in the Middle East and North Africa, 2001. Hisham Melhem, "Syria Between Two Transitions", Middle East Report, No. 203, 1997 , pp.2-7 "Caught in the Middle, as Usual; Jordan" The Economist, Nov. 12, 2005. "Fayad resignation to deliver blow to Palestinian reform drive", Sunday Nov. 20, 2005 Optional: Kiren Chaudhry (1991), “On the way to the market: economic liberalization and Iraq’s invasion to Kuwait.“ Middle East Report, 170. Aydin Cecen, A.Suut Dogruel, and Fatma Dogruel (1994), “Economic growth and structural change in Turkey, 1960-1988." IJMES, 26. Class 22 Gender in the Middle East Economy Subject: What issues have particular relevance to women in the Middle East? Women's education has been identified as a key Millennium Development Goal. What are trends in female literacy and education in the Middle East? How does this affect the economic picture of the Middle East? How do women's experiences in the Middle East vary? (healthcare, Honor Crimes, women's literacy, employment). What factors affect fertility rates? How do fertility rates vary with women's economic opportunities? How do women's (economic and political) opportunities vary by country? How does military service affect the role of women in the Middle East economy? Readings/Assignment: "Honor Crimes Under Jordanian Law – The Campaign Against Article 340" Human Rights Watch: http://www.hrw.org/reports/2004/jordan0404/4.htm "On their way; Saudi women" The Economist, Dec. 3, 2005 SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East "Saudi Women Demand Municipal Council Membershhip" Paper, BBC Monitoring International Reports, November 27, 2005, 556 words Class 23 Islamic Banking Subject: Explore the growth of Islamic Banking. What is Islamic Banking? What are the criteria of Islamic Banking? What does this mean for the finance market in the Middle East. How are organizations/corporations finding ways to be Islamic Banking Compliant? Do Western institutions that want to compete in the Middle East need to offer Shari'a compliant banking practices? Readings/Assignment: "Emirates Islamic Bank boosts Islamic Finance in the Region with Two Significant new Initiatives.," Al-Bawaba, November 29, 2005 Tuesday, 368 words, By Al-Bawaba Reporters HBS Case: An Introduction to Islamic Finance Masudul Alam Choudhury (1999, reprint), "Principles of Islamic economics," in Tim Niblock and Rodney Wilson, The Political Economy of the Middle East vol. 3. Optional: Timur Kuran (1999, reprint), "The Economic System in Contemporary Islamic Thought: Interpretation and Assessment," in Tim Niblock and Rodney Wilson, The Political Economy of the Middle East vol. 3. Class 24 Is there a Peace Dividend? And Economic Approaches to Peace-building and the Israeli-Arab Conflict Subject: What are economic elements of peace? What are the benefits of economic integration versus separation? Effect of the disengagement on Middle East economy. Economic cooperation in the region. If there is a peace dividend, how high will it be and who will get it? The class will conduct a role play simulation analyzing the economic interests involved in the Peace Process. Readings/Assignment: Moshe Alamaro, "The Economics of Peace", Harvard Business Review, Nov. 1, 2002. "Building a Successful Palestinian State", RAND, 2005 "Will they Sink or Swim" Special Report: Palestinians in Gaza The Economist, pp.29-31 September 24, 2005. Fischer, Stanley, Patricia Alonso-Gamo and Ulric Erickson von Allman, "Economic Developments in the Palestinian Economy Since Oslo," Economic Journal, June 2001. Donald Sylvan, Jonathan W. Keller and Yoram Haftel,"Forecasting Israeli-Palestinian Relations" Journal of Peace Research, 2004 Summary Document on the Portland Trust and Portland Trust Strategy SYLLABUS Jan. 20, 2006 Econ 970: Tally Zingher Economics of the Middle East Useful Sources on Economics in the Middle East: Economist Intelligence Unit Reports CIA World Factbook The Financial Times Wall Street Journal The New York Times World Bank: (http://lnweb18.worldbank.org/mna/mena.nsf?OpenDatabase) www.aljazeera.net www.albawaba.com www.haaretz.com www.menareport.com www.meria.ac.il (Middle East Report of International Affairs) http://www.infoprod.co.il/http://www.columbia.edu/cu/lweb/indiv/mideast/cuvlm/The Gulf 2000 Site: Covers the following countries: Bahrain, Iran, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates: http://gulf2000.columbia.edu/