Underdevelopment or dedevelopment in the
Arab world
Development by encroachment in the
Arab region
Development is about unleashing human
potentialities and broadening the choices of people.
Development is also the infusion of knowledge in
production, incremental growth in capital and
progressive institutional change that responds to the
demand of working people. Development, in the
broad sense, combines the freedom paradigm and
capital accumulation – but, not in a static
combination. It is the mediation by which the people
interact with the social condition for the purpose of
development. It is the outcome of peoples’ struggles
to improve their lives through the political process.
2
De-development
De-development is the purposeful activity of eroding
and deconstructing developing entities, and,
primarily, of stripping the peoples in those entities of
the right to own and control their resources, and use
them for their own benefit.
Article 1 of the International Covenant on Economic,
Social and Cultural Rights, says: “All peoples may,
for their own ends, freely dispose of their natural
wealth and resources without prejudice to any
obligations arising out of international economic
cooperation, based upon the principle of mutual
benefit, and international law.”
Empirics
Table 1. Growth in real GDP per capita in the AAS region
19711980
19801990
19902000
19712000
GCC countries 1.85
(7.67)
0.50
(2.78)
Other
diversified
economies
5.87
(0.16)
0.35
0.02
Total AAS
4.99
(3.43)
0.34
(0.85)
Source: United Nations Statistics database.
4
Long run average per capita
growth rate
Real percapita income Logarithm (average=about zero percent)
8.2
8.1
8
7.9
7.8
7.7
7.6
Real per capita income
Linear (Real per capita income)
7.5
7.4
7.3
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
7.2
5
Despite a solid growth performance
since 2003, unemployment rates
responded poorly to growth and
remained high. There was roughly a one
percentage point drop in unemployment
over a three-year period (2003-2006)
that witnessed a cumulative growth rate
of 17percent- based on official sources
6
Law of labour demand
In an area that exhibits the highest rate of
unemployment globally, this weak response
in job creation to growth makes anomalous
the law of labour demand as derived demand.
It also points to deep seated reasons
associated with the nature of the
accumulation process that disrupt the
intermediation between economic expansion
and social development. Employment
derives from development when there
wasn’t any.
7
May day: Markets are unusually different
The labour market is where labour services are
exchanged for money value. In an Arab labour
market: labour share forms 20 to 25 per cent total
income (it is around 70 per cent in advanced
economies), productivity is always near zero, and,
if a more comprehensive form of assessing
unemployment is carried out, more than half of the
labour force could be considered unemployed;
more importantly, most of those remaining
employed will be clients of the rentier state (not
workers who exchange labour service for a money
wage but for submissiveness). To construct an
imaginary market as a lifebuoy of development
represents a form of deceit based on
misrepresentation of fact. A different approach and
criterion for job creation is required.
8
Investment rates plummet as private sector
takes over
Investment ratio
0.35
0.3
0.25
0.2
0.15
Investment
ratio
0.1
0.05
19
75
19
79
19
83
19
87
19
91
19
95
19
99
0
9
More than just machines
When the cornerstone of
development-the creation of jobs, fails
to be met, the causes have to be
explored not so much in the slow rate
of build-up in machinery, plant and
equipment, but more so in the way
power, control and decision making
are articulated between the regional
and extra-regional social formations.
10
Oil: bliss or burden
Oil rents dichotomise an economy. A
highly capitalised oil sector creates few
jobs relative to the capital invested in it
and, in an adjunct manner, decent job
expansion occurs through patronage in
the public sector. Oil is a curse only
because there social forces that intended
to be that way.
11
‘Wherever merchant capital dominates: backward conditions dominate’
Weak financial intermediation between money
assets that accrue from oil and a healthy rise
in income associated with rising productivity
(unrequited transfers or un-cashed cheques)
Rents earned without effort ( Keynes and
euthanasia of the rentier)
Preponderance of commercial activity (import
led growth) and the state devolves a social
articulation strengthening divisions.
Economy leans ever more heavily towards the
service and informal sectors.
12
Labour productivity
Table 1: Labour Productivity Growth (selected countries) 1980-2001
percentage
.
Iraq
-6.9
Jordan
-1.5
Saudi Arabia
-2.9
Syrian Arab Republic
-0.2
United Arab Emirates
-2.4
Yemen
0.2
Source: ILO (2003) Key Indicator of the Labour Market
13
Unemployment trap
. Service sectors already hire more than
ten million extra-regional workers and
pay out poverty wages. The region is
in an unemployment trap. The articulation of a cross class-border
alliance forbids the peoples of the
region from locking in resources.
14
Virtuous/vicious circle
Profits are drawn from short term
speculative and commercial activity tapping
into oil rents as opposed to a knowledge
based /increasing returns economy.
Resources are being intermediated by
speculation on a poorly regulated regional
asset market- things might get worse- the
bursting of a huge real estate bubble.
15
A rough measure of capital per
worker
Trend
Trend in capital per worker
9.9
9.85
9.8
9.75
9.7
9.65
9.6
capital per
worker
Linear (capital
per worker)
199019921994199619982000
16
Time is of the essence
Uncertainty, fragile security and deepening labour
force differentiation enhances short term rents in all
the sectors making the present more valuable than
the future. But, it may be relevant to recall the
overarching condition of geopolitical uncertainty
and its impact on inter-temporal preferences,
institutional vulnerability, and the already inherent
uneven developmental state of the member
countries, i.e. uncertainty about the future deadens
investment and development
State guarantees are required to promote the long
term investment projects that create jobs
17
Actual and foregone GDP
War loss: Conflicts exclude stability over the long term needed to redress frail
investment in infrastructure, plant and equipment and create social schisms that
set back social development for a very long time.
600
400
Actual GDP
300
Foregone GDP
200
100
20
00
19
98
19
96
19
94
19
92
19
90
0
19
88
Billions of US dollars
500
18
Money goes abroad
Uncertainty drives resources away. (people, raw
material brokered by a distorted price system and
money assets). Needless to say, within the existing
institutional context, presumptive redistribution
allowing for lesser concentration of private wealth
and greater interest in regional development is
highly unlikely either within or across member
countries. In any case, to date much of the region’s
excess savings, some four trillion dollars over 30
years, are divested abroad- a rentier class does not
have a stake in the region.
19
Unlike others: high savings
Saving and investment ratios
90%
80%
70%
60%
S as % GDP
50%
I as % of GDP
40%
Poly. (S as % GDP)
30%
Poly. (I as % of GDP)
20%
10%
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
0%
20
High inequality
The inter/intra wealth and income
divide between lower and highest
quintiles/deciles is highest globally in
this region (Texas income inequality
data project). Where there was
growth, income inequality rose at a
faster rate.
21
Security
Security is best understood as a totality with
three interrelated levels: first, national
security, including the protection of the right
of people in the Arab world to selfdetermination; secondly, democratic
security through the promotion of citizenship
rights and the institution of democratic
accountability; and, thirdly, human security,
particularly the right to social protection and
decent employment.
22
Sovereignty
These manifestations of security are to be considered
not separately, but either in their wholeness or as a
combination in which national security, which is a
direct product of the degree of alliance between the
labouring classes and the ruling regime or the
distance that ruling regimes keep from imperial power
centres, holds primacy. The practice of realising
national security through the mediation of the
struggle of the labouring classes, and the changing
power structure of class alliances and fronts, will form
the substance of sovereignty.
23
Unlocking potential
The right to development is synonymous with the
right to peoples’ security as defined earlier. The
degree to which international relations and
economic imbalances, in particular, the dollar as an
overstretched global currency, may have become
dependent on either the prolongation and/or the
outcome of the conflicts in Arab region is now
greater than it was before. Smoothing the transition
from an international order by the degree to which
foreign powers exercise influence and control in the
region runs counter to their obligation of the
international community. We need to demystify the
process in the region and situate matters
accordingly.
24
Encroachment and
dispossession
The Arab world is subject to a process of
accumulation by encroachment and dispossession
and, hence, de-development. Although it is possible
to observe narrow strips of accumulation by
commodity realisation and doux-commerce in the
Arab world, the preponderance of violently imposed
social dislocation, rents structured around oil, and
commercial, as opposed to industrial activity
unequivocally indicate that accumulation by extraeconomic means (encroachment and dispossession)
holds primacy over the course of events.