co-operation withregard totherelevant economic andsocialactivities ofthe United Nations systemwithin theESCWAregion; (e)Toactasa"think tank"contributing totheenrichment ofdevelopment literature inviewofthedistinctive position ofESCWAinthatdomain amongthe various regional andnational organizations intheArabregion; (f)Toformulate andpromote development assistance activities andprojects commensurate withtheneedsandpriorities oftheregion andtoactasanexecuting agency forrelevant operational projects. 34.4Thesharpdecline inoilprices hasledtoadecline inthefinancial resources available fordevelopment intheESCWAregion. Recession inGulf Co-operation Council countries hasresulted inadecline intheflowofcapital to therestoftheregion andareduction inworkers' remittances aswellas return-migration ofworkers fromlabour-importing tolabour-exporting countries in theregion. Development intheregion wasinfluenced byunfavourable global economic developments, coupled withmilitary conflicts andpolitical instability, whichcontinue tohamper development andgrowth. Thearmedconflict between Iran andIraqwentonforabouteightyearsuntil acease-fire tookeffect in August 1988. Themilitary conflict inLebanon remains adestabilizing factor. The struggle ofthePalestinian people fortheirhumanrights andself-determination -3- Digitized by Dag Hammarskjöld Libraryhasstillnotbeenresolved. Thesituation continues todivertresources -both humanandmaterial -awayfromeconomic andsocial development. Thisisreflected inthesizeofdefence budgets whichstrainthelimited resources ofmanyESCWA countries andcontributes totherapiddeterioration oftheexternal debtposition ofsomemembercountries. Thesocial consequences oftheseconflicts havebeen enormous andarereflected indeteriorating standards ofliving, lowerincomes, highdisability rates,thedisplacement ofsegments ofpopulations, thedestruction ofproperty, andtheproblems ofsocialadjustment tochanges intraditional norms andcodes. 34.5Theeconomies ofmostmembercountries continue tobecharacterized byan unbalanced economic structure. Inthecaseoftheoil-producing countries, thisis reflected inthedominance oftheoilsector; hence,energystandstobeamajor issuethatESCWAcontinues toaddress. Inthemorediversified economies, the commodity-producing sectors havelanguished overtheyearsincomparison witha growing services sector. Inthisconnection, norealgrowthinthemanufacturing sector h~stakenplace. Theshareoflocaloutputinmeeting totaldemandfor manufactured goodshas,infact,beendecreasing overthelastdecade. Similarly, foodsecurity intheregionisvulnerable owingtoaweakagricultural sector. To alargemeasure, thisisduetowaterscarcity. Giventhearidity oftheregion, conservation andrational useofwaterbecomes anissueofextreme importance. Yet manyotherfactors contribute tothisproblem: degradation ofthenatural resource base,inadequate physical andsocialinfrastructures, lowtechnological levels, and thelargely unfavourable socio-economic environment underwhichagricultural production isundertaken. 34.6Theeconomies ofthecountries oftheregionarealsocharacterized byahigh degreeofdependence ontheworldeconomy. Theregionis,therefore, extremely sensitive tointeraction withtheworldeconomy. Inthisconnection, thesmall sizeofthedomestic marketofindividal ESCWAcountries renders industrialization highly dependent onexport-oriented strategies. This,inturn,implies theneed formoredynamic traderelations amongtheESCWAcountries themselves andbetween theESCWAcountries anddeveloping countries inotherregions. Development ofboth theindustrial andagricultural sectors areclosely linkedwithinternational trade through theirdependence ontheoutside worldforvirtually allmachinery and equipment andalargecomponent ofintermediate products. Theinterdependence between agricultural development andexternal tradeisalsoevident intheregion's critical dependence onfoodimports, thedominance ofagricultural rawmaterials in theexporttradeofthenqn-oil economies oftheregion, andthefactthattrade provides anoutlet forag~icultural surplus produce. 34.7Thepossible medium-term andlong-term impact ontheregion oftwoimportant
**Analysis**
The text discusses the economic challenges facing the ESCWA region, including the decline in oil prices, military conflicts, and political instability, which have resulted in a decline in financial resources, reduced capital flows, and a struggle for human rights and self-determination. The text also highlights the region's dependence on oil, the need for water conservation, and the vulnerability of food security. These issues are all interconnected and have a significant impact on the region's economic development.

**Category**
Economic development, Natural resources and environment, International trade