Recent academic and policy discussions have emphasized the poor growth performance of MENA’s economies since the mid 1980s. It has been argued that the expanding global economy presents MENA with the opportunity to augment its limited pool of national savings with private capital inflows. However, MENA’s dependence on the global economy to bridge its domestic resource gap has been driven by conditions internal to the region. This paper addresses a much neglected dynamic in MENA, demography. Using an international growth perspective, the paper demonstrates that demography conditioned MENA’s growth performance over the period 1965-90. Whereas demography depressed domestic savings, retarded capital accumulation and constrained economic growth in the past, the dynamics of MENA’s demography over the next 25 years predict an enhanced potential for mobilizing domestic resources for growth. This potential, however, requires appropriate fiscal, financial and institutional reforms and improvements to raise national savings and investment. Thus, economic policy, while facilitating integration into the global economy, should simultaneously focus on reducing its dependence on foreign capital, especially when international capital markets remain highly segmented and volatile.
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