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A less obvious problem, that has nonetheless added to the stagnation in Arab economies, is, that for all the money spent developing them -
or perhaps because of their money - the Middle East economies have failed to develop to their expected potential. They have changed much less in the last twenty years than the developing countries of the Far
East and South East Asia, that have developed through human ingenuity, hard work, and effective educational and training programmes, rather than handing out benefits to its citizens for nothing in return.
The most obvious signs of the Arab world's economic failures are the low growth rates for the region. The fact that in all the rich, oil producing states, economic activity still remains largely dependant on
the government's spending on key developments and construction, while the poorer Middle Eastern states outside the Arabian Peninsula, including several that are oil producers, have failed to develop any
self-sustaining growth. These have relied on the remittances flowing into their countries from workers who are employed in the rich Gulf States and elsewhere. This has to some extent cushioned their
economies and slowed economic development. These factors have hampered the development of efficient industries and the establishing of forceful economic institutions. Government interference or control,
secrecy, archic legal structures inefficiency, an ill trained or unwilling work force, have all contributed to the failure of Arab states to become players in international world trade. This has left most of
them with industries that are uncompetitive and inefficient, with high unemployment rates, large foreign debt and aging infrastructures. All Arab governments are facing an international economic
environment that is dramatically different from the economic structures of the 1980's and 1990's. International competition is intensifying. Space and time are being compressed because technological
development and information processing is speeding up. Global distribution systems and multi-national trading groups have enabled new technologies to spread faster then ever before. This has had a profound
effect on societies around the globe, changing patterns of trade and the way people live their lives, thus making rapid adaptation of new economic and social structures vital, if countries wish to compete
successfully in the information based, technologically innovative, global economy. Unfortunately, rapid change, adaptation of ideas, and free trade practices are not noticeable characteristics of the Arab
world. A 1999 United Nations report on human development noted that, "of all the 'developing regions', the countries of the Middle East remain the least prepared to meet the challenges that will present
themselves in the next fifty years". Basic structural weaknesses in Arab economies are hampering their ability to adjust to global change, to meet the challenges of mutual co-operation, and to protect
themselves from the adverse effects that these rapid changes on their countries and their societies have brought about. In the UN's assessment, "the Arab economies are still at a very low entry point in the
information age". The future of the Arab economy will depend on their ability to deal with their structural problems and lessen their dependence on non-sustainable income derived from oil. Much will depend
on how well Arab governments anticipate and harness global change, alleviate the growing water and manpower crises in the region, and prepare themselves to exploit the opportunities provided by the new
information and digital economy. At the same time, they must more effectively manage their reserves, pricing structures and production, while protecting their societies and economies from globalisation's
more negative consequences. Ultimately, it will all depend on the extent to which Arab states can embrace meaningful collective action to face these challenges, and more crucially, on how their governments,
businesses, investors, workers, and communities, respond to the challenges that are before them. There is an urgent need first, for Arab governments to define what it takes for them to succeed in the
global economy, before they can establish broad agreements based upon their definition. Achieving this would give a shared vision and a common sense of purpose to the entire region; a common approach, with
clearly defined aims that will enable Arab economies, through co-ordination and co-operation, to raise the productivity of their economic activities and improve their competitiveness in the world. This would
enable them to work together in a spirit of collective self-interest, to build efficient and sustainable social and economic structures, and transparent institutions, across the regions. This would raise the
overall standard of living for their citizens and protect their culture and its values. Individual state action is not sufficient. Given the population sizes of most of the Arab countries, any action taken
will always be small and insignificant when compared to the colossal trading blocks, giant multi-nationals, western cultural influence and the strong self-interest and power of the United States. Therefore
the basic premise of restructuring Arab economies to meet the challenges of a fast changing global economy is simple: Arab states need a collective co-operative and innovative economic and social policy, as
part of a broader renewal plan for the entire region. There is no elaborate blue-print or quick fix for Arab economies. Nor is implementing an array of expensive governments programs or wasting money on
dreams or fads that have no practical benefit for Arab society as a whole. Rather, the focus should be on providing a framework, an understanding, and a strategy that allows Arab nation states and their
citizens to work realistically as partners. It is only by working together that they will be able to prosper and derive real benefits from the changing pattern of global trade. Grand schemes and large
uncoordinated government programmes have not borne the fruit expected of them by the governments of the region. While some grand schemes were necessary in the earlier stages of development; they are not
longer workable as Arab development is far too complex a process for one single sector or scheme to carry through, or sustain development. Arab economies today remain almost as un-diverisfied
as they were in the 1970's. The hard truth is that a country like Finland, with a population of six million, exports more when oil exports are discounted, than all the Arab states and their 260 million
citizens put together. Throughout the region, rentierism is a widely spread phenomenon, as most Arab states still derive most of their income from fixed unearned assets, such as oil revenue, rents or
interest. There is also a secondary dependence on oil revenues by Arab countries such as Egypt and Jordan in the form of remittances. Arab countries need to move away from being rentier societies; they now
need to become productive economies based on high value added, and renewable production and services. To be successful in building this type of economy, much will depend on Arab governments being able to
instill a will to work in their citizens, giving them the necessary educational and technical skills, and encouraging innovation and development. They have to draw up appropriate educational and research
policies and allow their people more participation in the economic and social decisions affecting them. Above all, they should be committed to entering the new economy, fully prepared to meet its challenges,
with clarity and determination. They can no longer be half hearted towards entry – fully-fledged commitment through common objectives is the only way forward. The potential for Arab economies to
"catch-up" is there, but it will only be realised when Arab states harness the potential of their societies. It will be those that manage to mobilise the necessary resources, investment, education, research
and development, restructure their commercial laws to make them more accessible to fair and open competition and match them with the needs of the people, companies, entrepreneurs, governments and
universities, who will succeed. What must be avoided at all costs, are the simplistic solutions. It is not enough for Arab governments to execute grandiose projects that do not provide
long-term benefits for their countries or relay on a single sector development like tourism, or banking, to develop their economies. If Arab economies are to move into high value and renewable production,
more complex and comprehensive solutions need to be sought. The development policy being proposed is not a budget or short-term economic fix. It is really a long-term framework that is intended to
establish a common goal, in a sensible and practical way, that shapes all segments of economy and society, giving them clear practical objectives to work towards. Changing the regions economic structure must
not be viewed as a one-off event. It should be seen as a continuous process, not as a destination to be arrived at. Moving Arab countries into the competitive mainstream will be the result of approaching
differently, nearly all aspects of our present economic models, which, in the conservative societies of the region, will be a major shift indeed. |
