384 chapter nine
Contrary to Yusri’s recommendation some twenty five years ago,
capital is flowing from Muslim to Western countries. Most of the
portfolio investment flows recoded in Table 9.2 refer to outflows of
capital from the Muslim World to developed countries rather than
inflows. The absence of multinational companies with head offices in
the Islamic World limits the scope for foreign direct investment (FDI)
flows between Muslim countries. Even movements of FDI between
Muslim economies and the entire global economy are miniscule as
table 9.2 illustrates.
Financial market integration in the Muslim World is also impeded
by the foreign exchange controls that are applied universally to the
export of capital, the GCC states being the major exception, although
much of the funds originating in these countries are invested in the
West rather than the Islamic World (Wilson, 2004).
For Muslim monetary union to be successful this would involve
setting and meeting convergence criteria similar to those agreed at
Maastricht, and subsequently, apart from the debt criteria, largely
Table 9.1: Intra-trade among OIC member states, 2001Intra- Share of intra- Intra- Share of intra
exports exports imports imports
$US billion % $US billion %Algeria 1.33 6.8 0.91 7.9
Bangladesh 0.22 3.8 0.88 9.8
Egypt 0.76 18.4 1.68 13.2
Indonesia 4.81 7.4 4.74 12.2
Iran 3.68 14.0 2.45 13.3
Iraq 1.04 9.4 1.10 21.2
Jordan 1.19 51.8 1.42 29.1
Kuwait 2.12 11.3 1.71 21.7
Malaysia 4.95 5.6 4.71 6.4
Morocco 0.50 7.0 1.88 17.1
Pakistan 1.98 21.5 4.45 43.6
Saudi Arabia 10.33 14.7 3.39 8.0
Syria 1.31 24.0 0.94 14.8
Tunisia 0.73 11.1 0.92 9.7
Turkey 3.90 12.5 5.27 12.7
UAE 6.06 15.1 9.00 20.8
Yemen 0.49 14.0 1.17 38.5
Source: Islamic Development Bank, Annual Report, 1423 H, Jeddah, 2003, p. 63.