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  As the 2004 report quoted above points out, the main obstacle to female employment in MENA is not situated at the level of objective factors involving health and education, the evolution of which has led to a marked improvement in women’s condition in other parts of the world. If there is a paradox here, it is precisely because MENA has seen significant progress in these areas over the past few decades but has failed to experience the changes in women’s political and economic roles that have gone hand in hand with such progress elsewhere.

  GRADUATE UNEMPLOYMENT

  The third major characteristic of unemployment in the Arab region is the high percentage of unemployed people who have completed their tertiary education. The average gross enrollment ratio in tertiary education in Arab countries—in other words, the number of those enrolled as a proportion of the total number of individuals of college age—reached 22% in 2009, considerably higher than South Asia’s and West Asia’s 13% or sub-Saharan Africa’s 6%, yet lower than East Asia’s and Pacific Asia’s 28%.54 This rate does, it is true, vary considerably from one Arab country to the next, among those Arab countries for which data are available (Table 1.3).

  FIGURE 1.12 Population with advanced education (latest available ILO figures in 2011). (Source: ILO)

  Similarly, while the share of graduates in the total number of the unemployed varies considerably from one Arab country to the next, depending on the proportion of graduates in the labor force, the proportion of people with a tertiary education among the unemployed is everywhere higher than their proportion in the labor force (Fig. 1.12).

  Moreover, the unemployment rates of people with a tertiary education are rising fast. The data below, compiled from various national statistics by a Tunisian economist,55 show how the unemployment rate has ballooned in the three central Maghreb countries over the past twenty to twenty-five years (Table 1.4). The acute nature of the problem in Tunisia, exacerbated by regional disparities, was a major contributing factor to the explosion in that country.56

  The most common explanation for this rise in the unemployment rate among graduates is inspired by the logic of the economic orthodoxy prevailing in international financial institutions. It is patent that the number of graduates has been increasing in step with the growth of the population as a whole, thanks to the democratization of tertiary education in most of the region in the 1960s. The increase in graduate unemployment results, the argument runs, from the mismatch between supply and demand regarding qualifications.

  TABLE 1.4 GRADUATE UNEMPLOYMENT RATES 1984–2010

  By this very rudimentary logic, college students need only study the right subjects to resolve the problem—as if the existing economies already had the capacity to absorb all those with a tertiary education, if only they had different qualifications. This logic also postulates that demand creates supply. But MENA students are apparently not studying the right subjects, since they are not finding jobs. Hence they are criticized for majoring in useless subjects at college, while their governments are criticized for not channeling them in authoritarian fashion toward the right majors.

  By the same logic, the demand that remains unsatisfied by locally available supply should lead to the importation of the qualifications required, or, in other words, to immigration of graduates from the rest of the world to MENA. Nothing of the sort is happening. Quite the contrary: outside the GCC countries, which have indeed attracted such immigrants because of the absolute insufficiency of their native human resources (and not merely because of their human resources’ inappropriate qualifications), Arab countries are in fact disadvantaged by the emigration of their graduates; they are victims rather than beneficiaries of the “brain drain.”

  According to the most recent available figures in the World Bank’s Migration and Remittances Factbook 2011, figures dating from the year 2000, the emigration rates of people with tertiary education from MENA to countries outside the region (essentially, OECD countries) were, for the countries with the highest emigration levels in relative terms, 38.6% for Lebanon, 17% for Morocco, 12.5% for Tunisia, 11.1% for Iraq, 9.4% for Algeria, 7.2% for Jordan, 7.2% for the West Bank and Gaza, and 6.1% for Syria.57 According to a study carried out by the Population Policies and Migration Department of the League of Arab States, the overall rate of emigration from all Arab countries of people who had completed tertiary education had reached 9% in 2000, after increasing an average 8.9% annually from 1990 on.58 This rate has most probably continued to rise since 2000. Very many of the emigrants had qualifications that are sorely lacking in the region. For example, 2,300 physicians left Syria and 3,000 left Egypt in the year 2000.59

  To account for the high graduate unemployment rate in MENA, a 2004 study carried out by a World Bank research team provides an explanation more convincing than the “mismatch” thesis. “The conclusion that emerges” from this study, its authors affirm,

  is that unemployment in MENA is a phenomenon that primarily affects young new entrants and women at the middle and upper ends of the educational distribution. Thus, the unemployed are essentially those who would have had a chance at a formal job in the public sector in the past and continue to have expectations of acquiring such a job. . . . To survive, those with no education must either accept whatever employment is available to them, no matter how casual, or create their own job. Although they might be underemployed, they are less likely to be openly unemployed.60

  This is insightful. The authors point out that there exists an incompressible number of people whom the local economy is incapable of absorbing, and that this number is incessantly growing due to the arrival of new people on the job market. But the more social requirements and aspirations that unemployed people have, the less they are inclined to content themselves with slapdash expedients in the world of the “informal sector”—in other words, to pull the wool over the eyes of international institutions or people conducting local surveys, if not to deceive themselves and those around them by disguising what is in fact unemployment as undeclared “employment,” “self-employment,” or even a “microenterprise.”

  FETTERS ON DEVELOPMENT

  In sum, what is incontestably revealed, both by economic growth rates, especially when we take demographics into account, and also by the data on employment and participation in the labor force, is that a number of factors are seriously inhibiting development in MENA. The weaker economic growth is, the less the economy is capable of absorbing a potential labor force that is expanding in step with population growth. The underemployment of the region’s population as a whole indicates, in the clearest possible way, the extent to which its potential for development is being thwarted, with an employment/population ratio well under 50% in 2010: 42.7% (Middle East) and 44.2% (North Africa), as opposed to rates of 54.9% for South Asia, 66.7% for Southeast Asia, 64.4% for sub-Saharan Africa, and 70.4% for East Asia.61

  When Marx talks about relations of production and property becoming fetters for the productive forces after serving as forms for their development, he does not mean just material forces in the sense of the application of technology. In his view, productive forces also include the force of human labor, which sets the factors that determine the mode of production and level of wealth—namely, science and technology—in motion. The question of the population held a central place in Marx’s thinking as he worked on his magnum opus, Das Kapital, especially as it bore on the basic contradictions of the capitalist mode of production. In the preparatory manuscripts for Das Kapital known as the Grundrisse (the first word of their German title), he develops the idea encapsulated in the 1859 Preface that serves as the epigraph to this chapter:

  Beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation [becomes] a barrier for the development of the productive powers of labour. . . . The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. . . . It is no
t only the growth of scientific power. . . . It is, likewise, the development of the population etc., in short of all moments of production; in that the productive power of labour, like the application of machinery, is related to the population.62

  Capitalism is a global mode of production and accumulation. Accordingly, its major periodic crises and convulsions manifest themselves on a global scale: the ones that mark its advance toward a level of development at which it will find it harder and harder to overcome the gridlocks inevitably provoked by the logic of profit informing it. It has so far managed to overcome these blockages, thanks either to the systematic destruction caused by wars or to changes in the mode of capitalist regulation.

  As was stressed at the beginning of this chapter, however, on the regional scale that concerns us here, we have to deal, not with a manifestation of the contradiction between the capitalist system and the development of the productive forces in absolute terms, but, rather, with a blockage specifically linked to particular capitalist modalities. We must go on to identify these modalities that, in a context of unequal development on a world scale, are inflicting economic growth rates on the Arab region that are lower than those in other parts of the developing world—despite that region’s wealth in factors of production (capital, labor, and natural resources)—and, most importantly, saddling it with unemployment rates considerably higher than those found elsewhere.

  CHAPTER 2

  The Peculiar Modalities of Capitalism in the Arab Region

  Examining the way the average annual growth rate of GDP per capita has evolved in the MENA region (Fig. 2.1) draws attention to several facts. This rate is subject to frequent sharp variation. It depends closely on political events: nationalization, regional wars (1967 and 1973 Arab-Israeli wars, 1980–8 Iran-Iraq war, wars that US-led coalitions waged on Iraq in 1991 and 2003), and so on, as well as oil price fluctuations. The latter, in turn, correlated with the recurrent political tensions in the MENA region, the main exporter of this highly strategic commodity. Yet, since its 1972 peak due to the 1971 nationalizations of oil, and its 1974 and 1976 peaks due to the price surge that followed the 1973 Arab-Israeli war, the region’s per capita GDP growth rate has exhibited a clear downward trend, in a context marked by the dismantling of the state-led developmentalist model.

  In the 1980s, this downward trend was exacerbated by the “oil glut” that followed the second, 1979–80 oil shock, which had far more limited consequences than the first. The increased influence of the oil-exporting monarchies of the Arab-Iranian Gulf, which, from 1974, suddenly found themselves with substantially higher petrodollar revenues, went hand in hand with the introduction of infitah policies (see Chapter 1) at the regional level by republican regimes that had previously claimed to be “socialist”: Egypt, Iraq, and Syria, joined by Algeria late in the decade. (Tunisia likewise went through a “socialist” phase in the 1960s. As for South Yemen, it was annexed by North Yemen in 1990–4.)

  FIGURE 2.1 GDP per capita annual growth (%); MENA—1969–2010. (Source: World Bank)

  This period, which heralded the global neoliberal turn, was dominated by the idea that the command economy had failed to overcome underdevelopment and absorb the population explosion. The panacea, which before long would triumph across the board, had it that development should be based first and foremost on the private sector. The lessons of the history of capitalism down to the mid-twentieth century were blithely ignored. The assumption was once again that the market’s “invisible hand” could ensure development much more efficiently than the state planners’ heavy hand. Nothing of that happened in the Arab region: after the roller-coaster decline of the 1970s, the 1980s witnessed negative growth rates. Notwithstanding the pronounced slowdown in population increase relative to preceding decades, GDP per capita annual growth has since 1990 hovered between zero and five percent. So low a range cannot make up for the accumulated development lag; it confirms the downward trend that has produced the deplorable results reviewed in the preceding chapter.

  THE PROBLEM OF INVESTMENT

  There is nothing mysterious about this low rate of growth. The decline in GDP per capita growth has gone hand in hand with a decline in the ratio of investment, or gross fixed capital formation (construction, transport infrastructure, and industrial equipment), to GDP (Fig. 2.2). The curve of these rates for the MENA region shows the depressive effects of the 1967 and 1973 Arab-Israeli wars, which were followed by a jump in oil prices and a sudden increase in infrastructure investment, thanks to the increase in oil revenues. This increase did not benefit only exporting countries by boosting their budgetary resources; importing countries reaped benefits too, in the form of grants, loans, and direct investments from exporters. Between 1974 and 1988, MENA registered strong investment growth, culminating in 1978 in an investment rate of 30% of GDP. In the wake of the second oil crisis, precipitated by Iraq’s 1980 attack on Iran, 1983 saw another peak in investment growth, up to 28% this time. Since 1985, however, MENA’s curve has fluctuated within a narrow range of 19% to 24%, displaying a long-term downward tendency.

  FIGURE 2.2 Gross fixed capital formation (% of GDP)

  The contrast with South Asian and East Asian performances is striking. Although the curve of fixed investment as a percentage of GDP for South Asia set out from a much lower level than MENA’s in 1969—14% as opposed to 19.6%—it exhibited an unmistakable rising trend thereafter, attaining a high of 30.6% in 2007, on the eve of the world economic crisis, as opposed to MENA’s 23% the same year. As for East Asia’s curve, it was initially quite close to MENA’s (apart from a sharp dip in 1974 following the October 1973 Arab-Israeli war) but diverged from it after 1983, climbing steadily until it had reached more than 35% a decade later. After a drop induced by the 1997 Asian financial crisis, the ratio of fixed investment to GDP in East Asia started rising again at the turn of the century, climbing back up to 35% by 2004 and approaching 40% in 2009. In MENA, in contrast, it has since 1985 consistently fallen short of 24%.

  FIGURE 2.3 Gross capital formation annual growth (%); MENA without GCC—1969–2007. (Source: World Bank)

  With the exception of the six oil monarchies, for which annual statistics are not included in World Bank data, the annual growth rate of gross capital formation (including stocks variation) for the region showed a downward trend for the four decades between 1969 and the onset of the global Great Recession in 2007 (Fig. 2.3).

  For the countries of the MENA region as a whole, the annual growth rate of gross capital formation was distinctly lower than that posted by all other developing regions of Africa and Asia in the 1990s. It was also distinctly lower than that of the other regions of Asia in the first decade of the present century (Fig. 2.4), although the MENA region was a net exporter of capital at a high rate.

  PUBLIC AND PRIVATE INVESTMENT

  Two crucially important points emerge when we examine the ratios of fixed investment to GDP more closely, comparing the MENA region’s performances here—excepting, again, the GCC countries, for which World Bank data are unavailable—with those of “emerging” Asian regions from 1995 to 2007 (the sole period for which we have relevant data for all three regions in question). The first point leaps to the eye: the rates of public gross fixed investment as a percentage of GDP are much higher in East Asia, where China is the dominant economy, than in MENA, notwithstanding their post-2004 decline (Fig. 2.5).1

  FIGURE 2.4 Gross capital formation annual growth (%); MENA without GCC—1969–2007. (Source: World Bank)

  East Asia’s very high public investment rates are an index of the state’s major role in this region, which boasts the world’s highest economic growth rate, thus belying the basic assumptions of the neoliberal ideology that has held sway across the globe for more than thirty years. The fact is that China can in no sense be seen to illustrate the success of the export-oriented market economy model. As was recently pointed out in a special report on the Chinese economy published in The Economist,

  it is investment,
not exports, that leads China’s economy. Spending on plant, machinery, buildings and infrastructure accounted for about 48% of China’s GDP in 2011. . . .

  A disproportionate share of China’s investment is made by state-owned enterprises and, in recent years, by infrastructure ventures under the control of provincial or municipal authorities but not on their balance sheets.2

  In MENA countries, in contrast, public investment in production and infrastructure has substantially decreased since infitah policies were introduced in the 1970s and neoliberalism was imposed as the standard model here as in the rest of the world. This decline in state investment goes hand in hand with the fact that the region exports a much higher proportion of state funds than the other developing regions of Africa and Asia (Fig. 2.6).

  FIGURE 2.5 Gross fixed capital formation, public sector, 1995–2007 (% of GDP). (Source: World Bank)

  FIGURE 2.6 Net official financial flows. (Source: IMF)

  FIGURE 2.7 Gross fixed capital formation, private sector; 1995–2007 (% of GDP). (Source: World Bank)