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Al-Ahram Weekly 25 February - 3 March 1999 Issue No. 418 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 25 February - 3 March 1999 Issue No. 418
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports People Time Out Chronicles Cartoons Letters Globalisation on human terms
By Taha Abdel-Alim *From the perspective of political economy, we may see in the "newness" of the new world order five categories of strategic change: the structure of the world economy; world economic systems; the international economic order; world economic priorities; and global economic thought.
Changes in the structure of the world economy have been based on advances in information and communications technology and the development of synthetic materials. The Arab economies have developed no policies to keep pace with the scientific and technological revolution. The mechanisms that are marginalising those Arab economies that export oil and other primary commodities have not been addressed, and the Arabs are not qualified to compete with technologies that allow importers of major Arab exports to reduce their consumption of these very commodities, specifically oil and other primary products.
Although the service sector accounts for a large share of the Arab economies, no efforts have been made to enhance its competitiveness. The disparity between Arab economies -- including those described as emerging markets -- does not imply that any of them has reached a level allowing it to compete even with the newly-industrialised countries (NICs).
Although they are integrated in the global economy, the Arab economies have not been organised to allow arrangements based on compatibility, let alone partnership, in the global factory or the global village. Despite their vast resources, the Arab countries can only become increasingly vulnerable to the outside world, and increasingly dependent on the industrial, developed and newly-industrialised countries. The changes in the world economic system have meant, first, the downfall of socialist economies; second, attempts to revitalise the developed market economies; and third, efforts to liberalise the economies of developing countries.
These changes have had a marked impact on social and economic realities in developing countries. The shift to an open market economy, in an attempt to escape the crisis engendered by a protectionist command economy, has most often had negative social and economic results due to the radical implementation of economic reform measures in the mid-'70s, and the debt burden that the developing countries had come to bear in the '80s. Today, there are indications that the days of cheap oil prices may be close at hand again (which would imply great losses for the Arab oil economies). We are also witnessing new protectionist trends and a slower, more limited transfer of technology from the industrialised countries to those NICs that have been successful in implementing economic reform programmes and shifting to an open market economy.
The terms of trade are deteriorating, and the economies of the least developed countries are being marginalised. Most importantly, the Arabs have failed to derive any positive lessons from calls for the establishment of a social market economy, and for the consolidation of the state's role in regulating market operations to foster growth and enhance competitiveness, on one hand, and to ensure greater equity in distribution and investment in human resources, on the other.
"Reckless capitalism" has been condemned for its failure to bring about the aims it had promised (greater efficiency and well-being). The growing popularity of the "new social liberals" explains Bill Clinton's election to two terms of office after the Reagan and Bush experiments in the US; Tony Blair's accession to power after Thatcher and Major in Britain; and Schröder's victory after Kohl in Germany.
The changes in the world economic order, or rather in its principles, institutions and mechanisms of management, have been defined in terms of power relations. With the collapse of the Soviet superpower, the opening up of the other socialist economies, including China (a "socialist market economy"), and the liberalisation of the developing economies, the principles, institutions and mechanisms of world capitalism have taken the helm of the global economy.
Although the institutions managing the world economic order are not all in place yet, the G-7 can be safely situated at the apex of the global economic management system. The jurisdiction of the IMF and the World Bank, furthermore, has extended to accommodate the entire world, while the role of the World Trade Organisation has been enhanced in light of the recent GATT agreements. In addition, the role of transnational corporations is gaining momentum, affording such institutions control of the more significant transactions at the global level.
The industrialised countries have adjusted positively to increasing competitiveness in the context of economic globalisation; yet these same countries are establishing regional blocs at an accelerated rate. Besides the EU, several industrialised and newly-industrialised countries are in the process of establishing transregional economic and trade forums and clubs. On the other hand, the forces that could allow Arab and other Southern economies to maximise their competitiveness are woefully inadequate. One weak and lukewarm effort has been made to establish economic regional blocs; this has come to little, although such arrangements are the sine qua non of survival in the new economic order. The United Nations has also become increasingly inadequate, as have its various organisations, most importantly UNCTAD. International arrangements such as OPEC and the G-15 have become similarly ineffective.
The emergence of new priorities on the global economic agenda was a logical consequence of these changes, but also of the challenges posed by scientific and technological progress, the changes in the economic role of the state and intensified global economic competition. Enhancing product quality and improving competitiveness have become paramount for those who are to withstand the challenges posed by the liberalisation of international trade. Industrial and technological advances resulting in increased revenue are now seen as the only way to achieve social welfare.
Accommodating the contradictions that result from conflicting trends in the global economy (liberalisation vs protectionism, globalisation vs marginalisation, nationalism vs regionalism...) is also essential. In this context, the absence of any Arab national or transnational programme to enhance productivity, optimise market efficiency, or accelerate industrial and technological progress through specialisation is shocking. Nor has any attempt been made to coordinate efforts to resist protectionism and marginalisation.
All these transformations have been reflected in new economic theories, formulated to address new challenges or to replace the ideological panaceas that have disintegrated. "Development" has given way to "sustainable development", which includes environmental preservation and pollution control. Also, the concept of human development has been revised to encompass equal opportunity, to alleviate poverty and to enhance productive capabilities. Military-industrial technology is now recognised as a security priority -- the very basis of power. Ideas of regional integration, which aimed at securing economic independence from the world capitalist system, have faded.
At any rate, the Arab countries have failed to make sustainable development their highest priority. This failure is due to a lack of awareness or of resources. But it is also due to a lackadaisical approach to Arab economic integration, a preference for nationalism or parochialism, and the inability to understand that Arab economic integration is an essential part of survival in the world economy. We must realise that Arab development cannot be achieved independently from the rest of the world. More importantly, we must know that technological capabilities are the basis of national security.
The policies established by the institutions that manage the global economic order are not conducive to maximising profits and minimising losses. The president of the World Bank recently noted that one cannot speak of putting one's house in order when the whole village is burning. There are 1.3 billion people living on a dollar a day. Three billion live on less than two. Over 1.3 billion people have no access to clean water, three billion have no sewage facilities, and two billion have no electricity. Very often, our perspective is too narrow, focusing on macroeconomics and ignoring the institutional infrastructure so essential for a market economy to operate.
We must strike a balance between radical reform and the interests of the poor, the WB president said. The call for a new world financial order reflected an increasing awareness that something has gone wrong: countries that implemented strict economic reforms for several years have become more and more vulnerable to international stock exchange crises. The workers in these countries, he added, are threatened with unemployment, their children often see their education terminated abruptly and their future destroyed.
Ready-made solutions are not good enough; development can be achieved only through a balanced social and economic programme -- an approach the world community as a whole has never adopted. We cannot and must not impose development that is dictated from on high, or that is dictated from abroad, said the president. He advised that the World Bank endorse the type of economy chosen by the people and government of each country. If we start thinking at the global level, and earmark our resources accordingly, he continued, we will be able to provide our children with a more peaceful and more equitable world.
No country can be isolated from the world system. We cannot wonder whether we should be for or against economic globalisation. We must ask instead: How can we adjust positively to this system? Most Arab countries are not prepared for the challenge. Their policies must be redressed to minimise weakness and maximise strength. In particular, they must strive to achieve comprehensive progress: economic efficiency, social justice, democratisation, national security and cultural specificity. In the Arab world, in Iraq, Algeria, Sudan and elsewhere, it sometimes seems that we are working in the opposite direction.
* The writer is deputy director of the Al-Ahram Centre for Political and Strategic Studies.
