They are two of the world’s most exciting areas when it comes to economic growth, and both are attracting a lot of interest from investors across multiple sectors, but how do the Middle East and East Asia compare? What are the strengths and weaknesses of each, and how are they likely to develop over the next 20 years? How is the continued growth of each likely to affect the other as economic power shifts across the world as a whole?
Middle Eastern strengths
Traditionally, the most important asset to the Middle East has been oil. This is facing problems at the moment due to low international trading prices, but locally, low prices are an asset, and have seen the region invest substantially in expanding its transport networks and, in turn, its cities. This has significantly boosted the construction industry and helped the broader trade sector, and it has seen both governments and businesses turn their attention to other opportunities within the energy sector. Kuwait, Qatar, and the Emirates still have strong oil buffers, and despite the struggles facing some other regional economies, the US oil companies are facing more severe problems. If they go out of business, the Middle East will boom as it moves in to fill the gap internationally.
East Asian strengths
East Asia suffered damage to its reputation after the tiger economies ran into trouble in the run-up to the global financial crash, but problems elsewhere in the world gave it a renewed opportunity to develop as a region and establish itself as an alternative center for trade. Its efficiency in manufacturing, especially in electronics and consumer goods, gave it the opportunity to expand in a sector where other nations were struggling. It’s now building up a strong base, which will be difficult for any other region to undermine, giving its economies the security they need to expand into other areas. This means that, while it can’t expect to enjoy the same kind of booms as the Middle East, it is in a more consistently healthy state.
The impact of technology
One significant factor that impacts how these regions are likely to develop in the future is their ability to engage with new technologies and build up technological infrastructure. In this area, East Asia is clearly ahead, but the Middle East may be in a position to catch up rapidly when the energy sector rebounds. The big question is how much of an advantage technological progress will give to East Asian businesses in the meantime. Also significant in this regard is education, with each region needing to increase the skills of its citizens if it is to be in a position to take full advantage of these developments.
Focus on Afghanistan
The bleak picture painted of Middle Eastern nations such as Afghanistan by the international media can lead people to overlook what’s happening there in terms of economic growth. Despite its troubles, Afghanistan has seen considerable improvement in economic activity over the past two decades, and it has been able to build on its solid agricultural base to take increasing control of its bountiful natural resources, including oil and gas, gold, copper, sulfur, and rare earth elements, which are in increasing demand as a result of ongoing technological developments. A recent deal on copper with China illustrates the way in which the Middle East and East Asia can potentially help each other, going forward. Meanwhile, Ehsan Bayat’s Tumblr illustrates how some Afghani entrepreneurs are working to improve educational standards in the country and help it increase its talent pool.
What does the future hold?
Looking forward, the picture is good for East Asia. Growth is steady, and experts expect it to increase within the next two years. Part of this is due to the willingness of governments in the region to be quite hands-on when it comes to regulation, something that may run counter to traditional ideas about what helps business grow, but something that has been significant in helping the region to boost its international reputation. The increasing stability of public spending is also helping. In the Middle East, the picture is less certain, but some sectors are extremely promising. Oil may be in decline, but over the long term, its scarcity can be expected to increase its value, and savvy Middle Eastern businesses are looking beyond oil to focus on the region’s other great fuel source – sunlight. As the solar revolution takes off, desert nations are well placed to prosper. Good links between this region and the increasingly diverse economies of East Asia could be beneficial for everyone.