Factors impacting the transition of OIC Countries

The Organization of Islamic Conference (OIC) is the second largest intra-government organization with 57 member countries spanning over four continents. The OIC accounts for almost quarter of the total world population (23% to be precise) but less than 11% of world’s total GDP. The total population of Muslim world is 1.6 billion where its total annual GDP is only $9.9 trillion.

It is also a fact that a great disparity exists in the OIC countries. For instance, only 20% of the Muslim countries contain almost 80% of the Muslim population. On the other hand, Guyana is also the member of OIC but it only has 6.4% of Muslim population. Similarly, the large concentration of GDP exists among few countries such as Qatar whose GDP/Capita is 11 times higher than average of all other Muslim countries.

Furthermore, the projected growth of Muslim population is much higher as compared to rest of the world, adding to the difficulties Muslim countries are facing at the moment. It has become imperative for OIC countries to take necessary measures to at least ensure the current GDP/ Capita rate in the years to come. In fact, if the Muslim countries want to increase their growth rate and catch up with rest of the world through technological adaptation and labor exploitation, they must develop right “social capabilities” to adapt to the change successfully.

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Institutional Development:

“Economic institutions are defined as a set of rules, compliance procedures and moral and ethical behavioral norms designed to constrain the behavior of individuals in the interests of maximizing the wealth or utility of principals.”

There are actually three pillars of institutional development that are:

  • Social and political system:
    Unfortunately, OIC countries in general lack the required social and political systems for sustainable economic development. It is a sad fact that most of the OIC countries even lack the basic parameters necessary for developing a strong and effective social and political system as indicated by the following diagram.

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More than 50% of the OIC population lives in countries with GDP/Capita rate of $3,476 only where as only 7% population lives in countries having an exceptional GDP/Capita rate that is $14,061 such as Qatar, Brunei Darussalam, United Arab Emirates, Oman and Turkmenistan. Obviously, countries with low GDP rate also struggle with problems like violence, political instability as well as lack of law and order.

  • Infrastructure development:
    Just like strong social and political system, most of the Muslim countries also lack the infrastructure as compared to developed countries hindering their progress in worst manner possible. Similarly, majority of Muslim countries don’t have fully developed infrastructure development parameters that are, paved roads, total rail routes in kilometers, total number of researches in R & D, total electric power consumption and electric power per capita.
    11aug14As it is evident from the above diagram, the OIC countries lag behind developed countries when it comes to implementing all the parameters of infrastructure development. For instance, when it comes to paved roads, 86 % roads of OIC countries having highest population weighted GDP/ Capita ($6,899) are paved. On the other hand, only 10% of the roads in OIC countries with lowest GDP/Capita ($1,045) are paved. Similarly, OIC countries present same disparity for other parameters for infrastructure development.As it is evident from the above diagram, the OIC countries lag behind developed countries when it comes to implementing all the parameters of infrastructure development. For instance, when it comes to paved roads, 86 % roads of OIC countries having highest population weighted GDP/ Capita ($6,899) are paved. On the other hand, only 10% of the roads in OIC countries with lowest GDP/Capita ($1,045) are paved. Similarly, OIC countries present same disparity for other parameters for infrastructure development.
  • Ease of doing business:
    The situation is no different when it comes to parameters for making it easy to do business in any country. OIC countries rank below the developed countries across all these parameters, most important of which are registering property, protecting investors, how easy it is to get credit, enforcement of contracts and trading across borders.
    11aug15Again, majority of OIC countries have failed to provide an environment that helps businesses to grow and flourish. For instance, it is very difficult for people to register property in countries like Pakistan having low population weighted GDP/Capita ($2,258) as compared to Muslim countries with higher GDP/Capita ($15,642) such as Saudi Arabia and United Arab Emirates. Similarly, it is really a herculean task to get credit for starting a new business in low GDP countries whereas it is relatively easy to get credit in high GDP Muslim countries indicating an apparent gap in their growth rates as well.

    Concluding, it is absolutely important for Muslim countries to overcome these challenges and leave no stone unturned to solve major problems if they want to keep abreast with developed nations in terms of growth rate and progress.

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