ABSTRACT

One country invests 10% of its national income in developmental sectors of its economy and realizes a growth rate of 3.3%. Another country invests the same percentage of its national income in the same sectors but realizes only a 2% rate of growth or even less, with no clear reason for the difference. Economists will probably explain that the discrepancy is due to inequalities in the capital output ratios or to differences in efficiency, productivity, or other such variables. Such explanations may be correct in a mechanistic way or in the sense of identifying the differences accurately and stating them as facts, but they do not tell why the productivities are different or why the capital output ratios are not the same. To a large extent, the differences are due to the inefficiency of the production process in one country compared with that in another. Or the differences may be found in the context of economic activity. A less developed context would sustain lower productivity than a more developed context. I suggest that a major obstacle to achieving a Middle Eastern takeoff has been an underdeveloped context in most countries of the region. I suggest further that until these defects are remedied, the transition to a takeoff will be unlikely.