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It's obviously because they are Muslim but why would that make them poor?  Unless of course, they are Muslim because they are poor - but that does not work because many Africans are poor yet they are Christian.  It has to be something that's happened over the centuries since the middle ages when Baghdad and Istanbul were actually richer than Europe.  So what happened?  There are three reasons commonly given for this: 1. Islam is hostile  to commerce - but Mohammed was a merchant and the Qur'ran praises commerce.  2.  Islam bans usury but so do the Jewish Torah and the bible.  3.  Muslims would like to blame western imperialism - especially more recently, American imperialism.  But Islam was once much more imperialistic - what happened?

Timur KuranA new theory has been proposed by Timur Kuran, a Turkish-American economist at Duke University.  He has written a book called "The Long Divergence: How Islamic Law Held Back the Middle East" which says that the Middle East fell behind the west because it failed to produce commercial institutions (e.g. joint-stock companies) that distanced themselves from individuals or partnerships and could endure for long periods of time and mobilize large quantities of resources.  Europeans got the idea of corporations from the Romans and by the time of the Medicis in 1470, were able to get very large. In Muslim countries because of generous inheritance laws and polygamy, wealth was spread over a large number of people and as business got complicated, the typically individually owned Islamic businesses could not compete with large limited liability companies, double entry book-keeping and stockmarkets.

More recently, some Islamic countries are trying to borrow western ideas - think Dubai and Turkey - but they have  a lot of catching up to do.  How much?  Well, the average income per head in the middle East is still only 28% of the European and US average.   Entrepreneurship rates are low.  And surprise, corruption rates are higher!  On a scale of 1 (bad ) to 10 (no corruption),  the three most populous countries in the Middle East averaged 3.2 - Turkey scored 4.4, Egypt 3.1 and Iran 2.2.   By comparison, Western Europe's five most populous countries averaged 6.5 (still not very high but double these Islamic countries!)   Is the low score because they are Muslim or is there some other reason?

Once of the things we often hear about is the rage of Muslims towards capitalism - and also towards Christians and Jews who don't have the same aversion to capitalism. If you are a loser, you don't like winners. The Protestant work ethic helps but the big reason for the success in the west is its ability to nurture corporations. So says Kuran.

He is basically saying that if Muslims want to succeed, they will have to adopt some western values.  Living by the Qur'an and Islamic law will not bridge the economic gap.

Source material and info for this article from a review by Schumpeter in the Economist of Timur Kuran's book: "The Long Divergence: How Islamic Law Held Back the Middle East". The Economist