Income Distribution and Migration in the

Three Arab Worlds

• How do we measure inequality? The Lorenz
curve and the Gini coefficient
• By the Gini coefficient measure, inequality in the
three Arab worlds is relatively low
• Low Arab inequality is reflected in low Arab
poverty rates, given average income levels
• Why?
– Little history of cash crop plantation agriculture
– Legacy of Arab socialism, food subsidies
– Islamic charity (zakat)
– Migration and remittances: Europe and the Gulf
• Aid and investment from Gulf states
Lorenz curve examples
 Gini index 2014
Country average is about 40
 Arab inequality is relatively low
• Examine most recent Gini indices (Gini x 100) for countries
with observations since 2000
• Arab sub-Saharan Africa:
– Djibouti 40
– Mauritania 40
– Sudan 35
– Yemen 36
• Arab fuel-endowed: Iraq 30
• Arab Mediterranean:
– Egypt 31
– Jordan 34
– Morocco 41
– Syria 36
– Tunisia 36
• Iran 38, Turkey 40
 Low Arab inequality reflected in low
poverty headcounts relative to income
• Examine 2010 shares of population living on less than
PPP$ 1.25, 2
• Shares fall as average income in that country increases:
– Low avg income countries 49, 75%
– Lower middle avg income countries 25, 55%
– Middle avg income countries 16, 36%
– Upper middle avg income countries 7, 17%
• Arab lower middle income:
– Djibouti 19, 41%; Mauritania 23, 48%; Sudan 20, 44%; Yemen
10, 37%
– Egypt 2, 15%; Morocco 3, 14%; Syria 2, 17%
• Arab upper middle income:
– Jordan 0, 1%; Tunisia 1, 4%
– Iraq 4, 21%
• Turkey 1, 3%; Iran 1, 8%
 Zakat is Isla ’s i stru e t
to relieve poverty
• From the Ha d ook o Isla a d E o o i Life: “… it is incumbent
on the Islamic state to guarantee a subsistence level to its citizens,
in the form of a minimum level of food, clothing, shelter, medical
care and edu atio .
• Zakat is the most important instrument for the redistribution of
wealth. Being one of the five basic tenets of Islam, this almsgiving is
a compulsory levy. The generally accepted amount of zakat is a one
fortieth (2.5 per cent) assessment on assets held for a full year, the
purpose of which is to transfer income from the wealthy to the
needy.
• In countries where zakat is not collected by the state (e.g., Jordan),
it is assessed and delivered privately.
• Among corporate entities, Islamic banks and financial institutions,
in particular, have established separate zakat accounts for collecting
the funds and distributing them exclusively to the poor directly or
through other religious institutions. This religious levy is applied to
the initial capital of the bank, on the reserves, and on the profits.
Responsibility for collecting and distributing zakat funds provided
by the bank is vested in the Shari’ah Supervisory Board.
 Much Islamic charity is organized by the
Muslim Brotherhood movement
• Retreat from Arab socialism created a vacuum, which was filled in
part by the Muslim Brotherhood movement (MBM).
• In Jordan, the MBM expanded its organisation and activities into
almost every social area, particularly in health and education.
• By 2005, for example, the MBM owned 2 large hospitals, 15 clinics,
1 university, 1 female community college, 28 primary and male and
female high schools, a d ki dergarte s. The MBM’s health a d
education sectors alone provided jobs for more than 4 thousand
Jordanian families.
• Other activities included the adoption of 10,000 orphans,
supporting more than 3700 poor Jordanian families, providing
school packs and student support to poor children at the beginning
of each academic year, food parcels to the poor, winter support,
poor houses’ re ovatio s, a d edi i e to the poor a d the eedy.
On average, these services annually cost more than $10 million. In
the health sector, more than 3000 poor Jordanians annually benefit
fro the MBM’s Poor Patie t Fu d.
 E igratio , i ter al igratio , a d
remittances in the Arab world
• Many poor Arabs, especially from Morocco, have migrated to
Europe. Many other poor Arabs, especially from Egypt and Yemen,
migrated to the GCC countries.
• This raises the incomes of those at the bottom of the income
distri utio , a d also their fa ilies’ i o es.
• In the European receiving countries (mainly France), Arab
immigrants have become an underclass with unusually low
educational attainment and unusually high unemployment. This
contrasts sharply with the United States, where Arab Americans are
richer and better educated than the typical American.
• In the GCC countries, Egyptians and Yemenis have likewise become
an underclass, but other Arabs such as Jordanians and Lebanese
hold jobs in engineering, management, etc.
• South Asians have replaced Arabs as the largest GCC expatriate
group. The Arab share decreased from 72 percent in 1975 to 32
percent in 2004.
 France dominant destination, Morocco
dominant origin for Arab migration to Europe
Some GCC populations dominated by expatriates
Many Egyptian return migrants
started businesses
 The GCC countries are both major
employers and major sources of aid and
investment for the poorer Arab countries
• Expatriates are a majority of the labor force in all GCC
countries, with the average in 2004 being close to 70
percent.
• During the period 2003-2008 the GCC countries accounted
for 28.6 percent of the foreign direct investment in the
Arab Mediterranean countries, compared to 37.3 percent
from Europe. Egypt was the single biggest recipient of GCC
investment (38.8 percent).
• The GCC countries also contribute $3-4 billion in outright
aid annually. Saudi Arabia is by far the biggest donor, but
Kuwait has also been important, and now Qatar and the
UAE.
• Saudi Arabia is very anti-Muslim Brotherhood and until this
year bankrolled the Egyptian government that overthrew
the ele ted Brotherhood preside t y overi g Egypt’s
balance of payments deficit.
GCC aid outflows by source country, 2002-2010
Kuwait, Qatar, and UAE collectively
overtake Saudi Arabia