islamic economic renaissance 385implemented by countries adopting the euro. As inflation rates var-
ied from over 40 percent in Turkey to virtually zero in the GCC
states (World Bank, 2002), and as interest rate differentials and
exchange rates movements reflect these disparities, there is little
prospect of convergence (ibid.).
Yet Yusri’s prophecy, or recommendation, of establishing a Customs
Union among Muslim countries is partially fulfilled. In the GCC
free trade was easier to achieve, as all of the countries were in a
more favourable trading position because of their oil exports, and
there were no restrictions on import payments. Deeper integration
came in 2002 when the free trade area was superseded by a cus-
toms union, with all GCC states adopting a common tariffof five
percent, and internal controls being removed on the movement of
goods (Looney, 2003). As the GCC countries had already many of
the pre-requisites of a common market, notably no outward restric-
tions on the movement of capital or local nationals, further moves
towards even closer economic integration were relatively easy to agree.
As a single currency was seen as essential for an effectively function-
ing customs union, it was only natural to take this further step
Table 9.2: Capital inflows and outflows for selected Muslim economiesPrivate Private FDI/GDP FDI/GDP
K/GDP K/GDP % 1990** % 2002**
% 1990* % 2002*Bangladesh 0.9 2.6 0.0 0.1
Egypt 6.8 6.6 1.7 0.8
Indonesia 4.1 5.4 1.0 2.1
Iran 2.6 2.4 0.0 0.0
Jordan 6.3 7.8 1.7 0.9
Kuwait 19.3 18.9 1.3 0.5
Malaysia 10.3 19.9 5.3 5.8
Morocco 5.5 3.3 0.6 1.4
Pakistan 4.2 5.3 0.6 1.4
Saudi Arabia 8.8 13.9 1.6 0.5
Syria 18.0 16.8 0.0 1.5
Tunisia 9.5 10.6 0.6 3.8
Turkey 4.3 7.7 0.5 0.7
Yemen 16.2 3.6 2.7 1.1
Notes: * Sum of FDI and portfolio investment inflows and outflows
** Sum of inflows and outflows of FDI
Source: World Development Indicators, World Bank, Washington, 2004.