In the Milken Institute's latest Capital Access Index, which ranks countries in the Middle East region based on the openness of their capital markets, Israel comes out on top, followed by Lebanon, Tunisia, Egypt and Jordan. At the bottom was Syria, just ahead of Morocco and Turkey, a statement on Business Wire said.
Israel, which has developed a thriving information technology industry and has the highest per capita annual income in the region — $16,000 — stands out with the most advanced capital markets in the area. Without it, the region as a whole would have the worst capital markets in the world, the report says. Much improvement in the flow of capital is needed if the region — including Israel — is to grow economically.
“As is true worldwide, the key to economic development is capital,'' says the report. “The Middle East, which is not known for its well-developed capital markets, is in the throes of trying to catch up — and there is a lot of catching up to do.''
Among the biggest problems: Equity markets are underdeveloped, corporate bond markets are almost non-existent, and foreign direct investment lags many other parts of the world.
Glenn Yago, director of Capital Studies at the Institute, whose group compiled the ranks, says stability in the Middle East requires economic development — and that, in turn, depends on open capital markets.
“Capital market development in the Middle East is a vital precondition for lasting economic growth,'' he says, “which itself is an important determinant of the likely success of the peace process.''
The Index, which is published in conjunction with Forbes Global magazine, measures how well national financial institutions put resources into the hands of entrepreneurs. Research from the Milken Institute shows that making long-term capital markets efficient and cheap is the key to the sustainable growth of historically unstable regions. — ( Jordan Times )
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