Reliance on oil is the main reason for industrial backwardness

A reliance on oil is the major reason why the Arab world is less industrialised than in 1970, the report concludes. Instead, the region has one of the highest unemployment rates in the world and will need to create around 51 million new jobs by 2020 to offset population growth. "The fabled oil wealth of the Arab countries presents a misleading picture of their economic situation, one that masks the structural weaknesses of many Arab economies," said Walid Khadduri, a co-author of the study.

The report noted the erratic course of Arab economies: "Rocky ups and downs in the Arab countries, from high growth in the 1970s to stagnation through the 1980s and back to extraordinary growth in the early 2000s, directly reflect the turbulent cycles of the oil market." It concluded that the lack of economic diversification had contributed to the insecurity of many of the region's governments, and to a pattern of foreign military interventions.

Regimes had failed to adjust to expanding deserts, increasing water scarcity and changing demographics. "It is not only a question of politics or good governance. It is how the government manages the economy," said Adel Abdellatif, the deputy director of the UNDP's office of Arab nations. Due to their weakened foundations, many Arab economies are becoming increasingly import orientated and service based, but the types of services offered "contribute little to local knowledge development and lock countries into inferior positions in global markets", the study found. The trend has grown at the expense of Arab agriculture, manufacturing and industry.

The region's failure to address the needs of young Arabs has resulted in a youth unemployment rate nearly double that in the world at large. Female unemployment rates are among the highest in world, presenting another regional problem. "Unemployment also often wears a female face," the report stated. "This reflects more than the failure of Arab economies to generate sufficient jobs; it points as well to entrenched social biases against women."

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