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Al-Ahram Weekly 13 - 19 May 1999 Issue No. 429 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 13 - 19 May 1999 Issue No. 429
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Books Travel Sports People Time Out Chronicles Cartoons Letters Coping with globalisation
by Sherine NasrCan Islamic countries play a more effective role in the world economic system?
The question was posed last week by economists, academicians and government officials from different Islamic countries who gathered in Cairo to discuss the place of Islamic economies in the globalisation process. At the core of discussions, held at Al-Azhar University's Sheikh Saleh Kamel Centre for Islamic Finance, was one question: why should a group of nations, having Islam as their common religion, have such vast resources yet exercise a minimal role in influencing the world economy?
Islamic countries extend over 34 million square kilometres, an area covering almost one quarter of the earth's total surface, as cited in a 1995 World Bank report. Geographically, they occupy regions in the Middle East, in northern and southern Africa, and in South and Southeast Asia. The Islamic world contains one fifth of the world's population. "Extended over such a vast area, the Islamic countries have the richest possible diversification of resources," said Ma'bed El-Garhi, head of the Islamic Research and Training Institute at the Islamic Development Bank in Jeddah.
These facts notwithstanding, the volume of trade among Islamic nations is very small. "In 1998 it was estimated at less than 10 per cent of the total volume of international trade," said El-Garhi. He added that except for crude oil -- the Arab countries alone produce 40 per cent of the world's supply -- no other commodity produced in Islamic countries, agricultural or industrial, is traded internationally in any significant amount.
Comparisons with Gross Domestic Product (GDP) rates of a number of European countries are even more alarming. When the GDPs of Islamic countries are combined, the total is an estimated $1,160 billion "which is slightly higher than that of Italy or England separately, less than that of France and, astonishingly, half that of Germany," El-Garhi said.
But a reservation was voiced by Professor of Economy Sami Afifi of Helwan University concerning the analysis of economic indicators from religious or ideological perspectives. "There are differences among Islamic nations which occupy different geographical regions, and this is what should be taken into consideration when we address the current problems and future prospects of the Islamic world," he said.
One example is that although Islamic countries which export oil have recorded some of the world's highest annual per capita income rates -- comparable with the US and Europe where per capita incomes are estimated at around $25,000 per year -- most of the non-petroleum exporting Islamic countries have per capita income rates averaging only $1,047 yearly, El-Garhi said.
Nevertheless, there are common features characterising the economies of Islamic nations which are often found in developing countries such as meagre growth rates, huge government budget deficits, alarming inflation rates and heavy external debt.
"In other words, we are poor in every sense of the word. Worse is the fact that we lack vision," said Afifi.
In spite of their deficiencies, Islamic nations are about to enter a new world of trade in the third millennium where they will encounter global economic competitors capable of imposing their strategies and policies in a manner mainly serving their interests, the conference participants said.
"We have to play the game, yet we have had no role in setting down its rules," said Abdel-Aziz Hegazi, former Egyptian prime minister, who is currently head of the Egyptian Institute for Accounting.
Minister of Economy Youssef Boutros Ghali said "Globalisation is a reality which we cannot ignore. But to open up to a global economic system without having the appropriate means and tools is no less dangerous than abstaining from participation altogether." To establish dynamic stock markets and free trade zones, to develop competent banking services, to give incentives to international capital and to encourage exports are all objectives which economies must meet to become competitive players in the new global system, Ghali said.
"So far, Islamic countries have adopted different attitudes towards the General Agreement on Trade and Tariffs (GATT)," said Farouk Shaqweir, head of the Policies and Economic Research Department at Egypt's Ministry of Economy.
Shaqweir explained that while Egypt, Turkey and Malaysia, three of the most influential Islamic nations, have adopted a very positive attitude towards the GATT by making the most of grace periods granted to them, other Islamic countries such as Saudi Arabia are still preparing to sign the GATT agreement.
At present, 34 Islamic countries out of a total of 56 have joined the GATT agreement. "It is unfortunate that each Islamic country is dealing with GATT separately. If Islamic countries were unified as one economic block, the terms of negotiations would have been more favourable," said Shaqweir.
The influx of foreign investments and multinational companies into Islamic countries is another fact to be dealt with by economies joining the global economic system.
"Developing countries that have opened their doors to these corporations have managed to attain positive development rates," said Sultan Abu Ali, former Egyptian minister of economy. These corporations introduce modern technology, more advanced industrial models and better marketing techniques, he said. "Unfortunately, except for what has happened in the petroleum sector, none of the Arab countries has made good use of these companies to develop other sectors of their economies," he said.
But dean of the Faculty of Commerce at Suez Canal University, Abdallah Hedeya, said the Islamic countries also have to contend with the fact that multinationals "allow modern technologies only in the sectors which they can monopolise, such as the mining sector in the Arab countries." This underscores the necessity for Islamic countries to master technological advances as a prerequisite to global competition.
