Globalization: Trade And Investment In Egypt, Jordan And Syria Since 1980 - Statistical Data Included

Arab Studies Quarterly (ASQ), Summer, 1999 by Paul Sullivan

Egypt, Syria and Jordan still rely on volatile sources of income such as oil, remittances, tourism, transport, phosphates, and trade in primary commodities. Many other have countries developed away from their reliance on primary commodity trade and toward technology-intensive, human capital (skill)-intensive trade, and (for labor surplus economies) labor-intensive manufactures exports. These three, especially Egypt and Syria in the 1980s, continued to rely on labor saving industries and volatile primary products trade, oil in particular. Jordan has been moving in the direction of human capital-intensive and technology-intensive trade most recently. They have been surprisingly successful in medicines and chemical products. Sometimes these developments in Jordan are tied to some outside investments in the form of foreign direct investment. But more often than not such successes are mostly due to domestic investments. Egypt has also shown some surprising success in chemicals and pharmaceuticals. The recent purchase of Amoun pharmaceuticals by Glaxo-Wellcome may bode well for the development of these very important industries.

All three of these economies have fragile economic connections internationally, because of the structures of their domestic economies, their human and natural resource bases, and their relative non-diversification of their international trade. Once these frailties have been shored up these countries will be more likely to reap the benefits from the globalization whirlwind.

Of the three, Jordan's economy has been the most private-sector oriented. Jordan was also the first of the three to leap into economic reform and structural adjustment with some zeal. This occurred in part due to the fall in phosphate prices in the early 1980s and its untenable debt and unemployment situations in the late 1980s and early 1990s. Egypt got its ERSAP program running with some zeal only within the last couple of years, after a switch in prime ministers and cabinet officials in early 1994. Syria is still unwilling it seems, even with Law 10 and other so-called liberalization measures to privatize, restructure and let the economy free itself from the heavy hand of the government that has controlled it for the last three plus decades.(13)

There have been many improvements in these countries, but hardly the improvements one would have expected if the policy environments of these three countries were more developmentally oriented. To be fair, however, these countries have also been subject to the whipsaw political cycles of the Middle East during the 1980s and 1990s. They have had to face embargoes, peace negotiations, fundamentalism, the fallout from the Iranian revolution, the Iran-Iraq war, Israel's invasion of Lebanon, Syria's virtual takeover of Lebanon, the phony peace process between the Israelis and the devastated Palestinians, and the collapse of the facades of Arab unity and the so-called Arab nation with the Gulf War of 1991. The financial and economic shocks of the Gulf War were, in the short to medium run, also significant. The Gulf War, however, had very different effects on each of these countries.(14) The stunning decline in the real price of oil since the very brief oil boomlet of 1973-1983 has been by far the largest shock to these economies. Some of the results of the collapse of the oil price are political as well as economic.