This paper explores the costs associated with youth exclusion in the Middle East by providing estimates of the economic costs to society related to youth unemployment, youth joblessness, school dropouts, adolescent pregnancy, and youth migration. The paper provides country-specific estimates of the costs of youth exclusion by using the human capital approach to valuing economic costs. In addition, the paper develops a new empirical methodology that benchmarks the costs of youth exclusion in Middle Eastern countries against a common hypothetical international “best-practice frontier” in which the overall costs of youth exclusion are comparable across countries. Results show that youth exclusion poses major economic costs to Middle Eastern societies, reaching in 2006 as high as US$53 billion in Egypt and about US$1.5 billion in Jordan. Moreover, Middle Eastern countries are among the group furthest away from the best practice frontier as it relates to reducing youth exclusion, and their performance has deteriorated in recent years. Middle Eastern countries could decrease youth exclusion by at least 60 percent if they were to use their available resources more efficiently.