Here, then, is the nonhysterical argument for globalization’s culpability. The worldwide spread of market forces has created both winners and losers–not just within countries, but among them as well. The Muslim world is home to many of the losers. And, adding insult to injury, world‐shrinking communications technology ensures that those on the bottom are constantly bombarded with images of those on top. No wonder they hate us.
It’s true, of course, that many countries in the Muslim world are economic disasters. According to statistics compiled by economic historian Angus Maddison for the Organisation for Economic Co‐operation and Development, between 1985 and 1998, average per capita income declined in real terms in Iran, Iraq, Jordan, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and Yemen. By contrast, it rose 30 percent in Israel, 50 percent in Uruguay, 90 percent in Chile, and more than doubled in China, Thailand, and South Korea. Such absolute and relative decline surely feeds feelings of inadequacy and hopelessness, thus heightening fanaticism’s appeal.
But where the argument falls apart is in blaming globalization for Muslim countries’ economic woes. For the sad fact is that, while newly liberated market forces have indeed fomented dramatic changes around the planet (mostly for the better), one place they haven’t fomented dramatic–or even substantial–change is in the Islamic world. With a few notable exceptions–Turkey, Malaysia, Indonesia, some of the Gulf states–most Muslim countries have kept international economic integration at bay. Highly restrictive barriers to trade and investment choke off the international flows of goods, services, and capital. Nor has globalization reordered these countries internally. Pervasive economic controls stifle competition, while the institutional infrastructure on which markets depend remains pathetically underdeveloped. Most Muslim countries are more or less immune from globalization’s creative destruction. They live in self‐imposed exile from the new global economy. In other words, it is not globalization that fuels Al Qaeda–but its opposite. For if the challenges of adapting to global economic integration are daunting, they pale in comparison to the frustrations of living in the defunct and discredited collectivist past.
Afghanistan, Algeria, Iran, Iraq, Libya, Saudi Arabia, Sudan, Syria, and Yemen–all are under the microscope these days for their ties to Islamist terrorism. Guess what else they have in common? None belongs to the World Trade Organization–which, with 142 members, is hardly an exclusive club. And that’s just one symptom of their economic disengagement. The Fraser Institute’s Economic Freedom of the World report (co‐published by my employer, the Cato Institute) rates more than 100 countries based on the openness of their trade and investment policies. According to the “trade openness index” featured in the 2001 report, Pakistan, Bangladesh, Syria, Algeria, and Iran all rank in the bottom quintile of countries surveyed. Not a single Arab or South Asian country makes the top half of the list. (Oman, at 59 out of 109 countries, ranks highest in the region.) Afghanistan, Iraq, Libya, Saudi Arabia, Sudan, and Yemen aren’t even included in the report because of a lack of reliable data.
While oil does provide an economic link between some Middle Eastern countries and the outside world, most other forms of transnational commerce barely exist. In Egypt and Sudan, exports equal around 2 percent of gross domestic product; in Pakistan and Bangladesh, it’s roughly 3 percent. By comparison, in emerging markets Mexico and Thailand, exports exceed 15 percent of GDP. Nor are most Muslim countries attracting foreign investment. As of 1998, just 2 percent of American direct investment occurred in Africa and the Middle East, according to the oecd. The numbers are similar for the UK, Japan, France, and Germany.
Of course, globalization is about more than simply trade and investment. It also means domestic economic liberalization–the worldwide move from state‐dominated models of economic development to more market‐oriented policies–that is, macroeconomic stabilization, privatization of state‐owned industries, elimination of price and entry controls, and reform of legal institutions. And, on this score too, most Muslim countries have insulated themselves. Since independence, collectivism of one stripe or another has dominated economic policymaking in the Islamic world. In Egypt, Syria, Iraq, and Libya, “Arab socialism” in various permutations was the guiding ideology; in Iran, Shah Mohammad Reza Pahlavi’s White Revolution was followed by the ayatollahs’ Islamic Revolution, and in the process government controls over economic life grew from extensive to sweeping. While the past decade has witnessed tentative moves by some countries–Egypt, for instance–toward economic reform, the collectivist legacy remains largely intact.
Consider two basic indicators of state involvement in the domestic economy: the relative importance of state‐owned enterprises and the extent of price controls. The Economic Freedom of the World report rates countries on a scale from 0 to 10 with respect to both criteria: Scores of 6, 8, and 10 indicate increasingly market‐oriented environments, while scores of 4, 2, and 0 identify progressively greater government ownership and control. Out of 13 surveyed countries–Algeria, Bahrain, Bangladesh, Egypt, Iran, Jordan, Kuwait, Morocco, Oman, Pakistan, Syria, Tunisia, and the United Arab Emirates–only one, the UAE, earned solidly promarket scores (6 on state‐owned enterprises, 8 on price controls). Over 80 percent of the scores were 4 and below.
Globalization is a messy, disruptive process, but it can’t explain Islamist extremism because it hasn’t touched most of the Islamic world. Indeed, that’s a big part of the problem. Expanding markets may bring turmoil, but they also bring opportunity and hope–qualities in decidedly short supply in many Muslim countries. The once bright and exhilarating promises of centrally planned modernization have all long since faded, and no new vision of progress has yet taken hold. In that bleak twilight of despair, the temptation to reject modernity altogether grows ever more alluring.