Introduction

Over the last 40 years Arab countries have made significant progress in laying down the foundations of modern economies and financial systems. Gulf economies have been boosted largely by oil export revenues resulting in among the highest rates of economic growth and per capita income in the world. Other Arab countries, such as those of North Africa, have experienced less rapid and more variable development although major reforms have been implemented at various stages aimed at introducing more market-based economic and financial systems. Typically, the energy-rich Gulf economies are characterized by low domestic income diversification, low inflation rates, stable exchange rate policies, high dependence on foreign labour, and a major role played by governments in the economic growth process. Those outside the Gulf have a high dependence on primary sectors and the government. The service sector throughout the Arab world tends to be modest in size compared with Western counterparts.