Chapter 1: Introduction
The economic performance of the Muslim-majority countries over the past four decades suggests that their performance has been comparable with that for countries that historically have found themselves at similar stages of development. The future economic performance of the Muslim-majority countries is likely to depend not on religious orientation, but on the efficiency and integrity with which market-oriented economic policies are implemented, and the rapidity with which the pro-growth institutions and organizations are established to sustain those economic policies. Pro-growth economic policies do not include the market-distorting policies and measures that featured so prominently during the 1960s and 1970s. Steady, efficient economic growth requires macroeconomic stability in general and price stability in particular. Monetary, fiscal and exchange rate policies generally determine the state of the macroeconomic environment, which, if stable, facilitates productive investment and economic growth and, if unstable, retards them. A deciding factor is the common knowledge of investors that the policy technology for maintenance of macroeconomic and price stability is now well established. This necessitates that the capital and foreign-exchange markets interpret any extended instability or volatility as the outcome of government policy and its lack of commitment to maintain macroeconomic stability. Recent experience suggests that monetary and financial stability is necessary to avoid recurring boom-bust cycles.