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Political Economy.docx

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Political Science
POLI 340
Rex Brynen

Political Economy Role of material resources in shaping politics. Oil rents, economic liberalization, and the roots of the Arab Spring overview  economic background  rentierism: notion that oil rents and other kinds of rents lead to particularly distinctive patterns of   tlk t onomi rorms n lirliztion sgulfstates.  possil poli onsquns n on roots o r sprin  economic liberalization  economic roots of the Arab Spring? political economy of the MENA region the middle east is a region is an area of very very varying econ  scne. On right there u see the gulf. With oil. Gleaming buildings. On  left u see ppl doing very ppoorly. Very diff economies large regional disparities  oil “haves” (GCC states, Libya­ having diffuclty exporting oil right now so its not a current ‘have’ but is kinda potential have with the  amount of oil it could produce.) intermediate cases (Algeria is much better of then these other three ▯ , Egypt, Syria, Jordan Algeria has oil. Egypt and Syria don’t have that much oil. But they have fairly developed production economies. Jordan is more  service oriented and getting money from abroad by remittances and foreign aid) oil “have­nots” (Yemen, Sudan) somewhat less unequal income distribution within most MENA countries than most other developing regions income distribution is somewhat less unequal than the avg developing countries. Most middle eastern countries are a lil unequal  amongs the global avg of all the countries. And the middle east is strinkingly less unequal than latin America which has along with  south Africa have very high internal inequality scene. Prolly 2 reasons y they have a lil less inequality than others. One might be a  longer historical one. And that is the institutionalization of the principle of zakat in islam. So theologically the notion of charity to the  poor not just as a good thing but actually built into ur religion and ur taxation scene has impoact and has been there for centuries.  Secondly, since 1950s we got the rise of social apartaus. The ideology of nasirs Egypt and baathis Syria is about welfare. Always  this expectatiton that state should provide. One exception is lebonan which hardly has any social system. So some notion that state  should provide coming from paternal scene from monarchy or from the rieterism where oil money is used to win poli support or cos  of this leftist ideology somewhat in Egypt etc.  but does it matter how better you are than others? Or does it matter what population perceive the situation as. Matters on how ppl  think things should be in their own country.  Middle east has significant variation in pesa.    GDP/capita political economy of the MENA region  historically unimpressive (non­oil) economic performance In most o non oil ountris on prormn s n unimprssiv Tr rn’t ny Tiln t wo vn’t inustriliz n om mjor xprtrs Poor on prormn Jorn my  irnt u tt’s os so mny Jornins r workin ro n snin mony om n los ttin  lot o orin i in s wi n too  better performance in most cases since 1990s – in part cos of econ reforms and liberalization,  although that came with costs of weakingin of welfare states etc. and econ growth rates don’t tell u  what share is being achieved by who.   low levels of Direct Foreign Investment. From multinationals etc. it was the investment that drove  asia tigers to bulandyan. Reasons for that were burearucracy and red tape. Restriction on foregin  investment, capital flows etc,  Tunisia, Egypt both above average prior to Arab Spring. Tunisia was one of the more succeful  non oil economies in the middle east. Both of them were much less effected by 2008 recsion than  other parts of the world. They were doin bad in comparative senseafter 2008 recesiion but over the  long run since their independence they haven been doing well historically.  Oil producers: rapid growth cos they are pumping more oil or oil prices have increased or both and  is not cos of rest economuy have grown. Theres an argument that oil growth has undermined non  oil growth. Algeria good example. Where focus on oil groth has meant that business policies in  other areas have not been much thought abt. Other is dutch disease argument is that If I sell a lot  of oil is that u need my currency to get my oil which appreciated my currency which makes my all  non oil exports too expensive so I cant export textiles to u cos my currency is over valued. Natural  resource exports can drive ur currency value up makin it difficult to export non natural resource  stuff.    rapid population­growth  challenge of unemployment Now birth rates are dropping. But had very high birth rates for last 30 35 years and so now we have  a hugh youth bulge. You need rapid job creation Ł you need a lot of jobs in non oil production cos it doesn’t  need that many ppl. so problem of rapidly growing labour force and weak performance in non oil sector  which creates potential unemployment.  economic performance You will notice middle east is generally lower, since early 1990s its high cos of oil higg prices then. economic performance • most MENA economies have proven relatively resistant to the 2008­  recession oil and the MENA region SOURCE: World Bank, The Employment Challenge in the Middle East and North Africa, December 2005. oil and the MENA region SOURCE: World Bank, The Employment Challenge in the Middle East and North Africa, December 2005. water scarcity Source: UNDP, Arab Human Development Report 2009 Impact of water on middle east politics. certainly not the kind of material resource which has  effected domestic politics in middle eastern countries. Could argue that in Syria there were protests  were partly underpinned by a drought. But it will become increasingly imp as how short middle east  is on fresh water. The data is on the annual amount of fresh water resources.  water scarcity Source: UNDP, Arab Human Development Report 2009 In Kuwait, uae, bahrian and water its very bad but it doesn’t matter cos ur income levels are so high that u can desalinate sea water and drink that. Its not good for agriculature. Saudis sometimes use it to grow wheat but that makes it 17 times more expensive than the world price and so Saudis subsiudize it to export it. So u are not growing wheat cos it makes some economic sense, it’s a patraongae system. In Jordan and Egypt, ppl cant afford to drink desalinated water. Either the govt will have to subsidize It but there are a lot of Egyptians and so will cost a lot or they wont be able to afford to drink desalinated water. Desalinaty price has changed cos of technological change and prices dropping and gdp is goin up in many countries, it migh be a long term solution but it requires for you to have pesa to get it. Gaza has very lil rainfall no permanent rivers. It gets a lot of water from Israel. Or it drills for it. But when u drill for water that water may have taken a million years to get there and so it will take another million years for thoise water sources to get filled agains. Plus sea water also goes to those places making it salty. So some places are there which have this sever crisis. Egypt is built on nile since forever and there are a lot of ppl on the nile and sudan and ethopia are devlopin and want a lager share of nile and so Egypt faces real problems of dependence on a civil war and theres less to go around per capita eveyr year and there are upstream countries wanting more. Desalinated water is actually more expensive than gasoline in gulf but ppl can buy it cos they can afford it and also cos gasoline too is relatively cheaper. At times conflict over water. Plo formed was formed in a arab meeting that was called to discuss Israeli diversion of Jordan river and its tributaries. Morsi also accused  being insufficiently tough  with ethopians abt the provision of water in nile which is an issue from before morsi but morsi is stuck witht hat blame too In many cases cos societies are historically agrarian (Egypt) so agri and nile been the beackbone of Egypt. So for that reason state is reluctant to charge the real price of water to farmers. It doesn’t make sense to export water in form of agri goods when ur so short on water. We should only export agri goods which doesn’t use a lot of water like citrus which is just giant bags of orange water. We should do that. We should make water more expensive. And certain partts of Egyptian economy which don’t make much sense from an economic point of view will have to fade but no one is goin to tell Egyptian farmers that they even have to pay for the water cos a lot of them don’t pay for water. So it will b politically fatal to start chargin them for water or we have to charge u utna jitna urban populations pay to drink the water. Similar case Jordan. East banker tends to be farmers and regime doesn’t wanna charge them the real price of water Israel too  have low pprices of water, Israeli agri is partly competitive cos Israeli farmers don’t pay the real price of water. Politically u cant tell farmers to pay for water cos its against the whole Zionist thingy key they came and made dessert bloom. It also takes a lot of water from west bank. So water scarcity not only cos population is increasing but also cos states artificially price the water low below the cost of reproducing it for poli reasons which are almost historical or ideological reason linking ppl to water. Libya spend a lot of money drilling water from below sahara and transporting it to manmade rivers. But that was water which took millions of years to get there and now are being drained at a very fast pace. Also since they are being drained so rapidly that sea water is getting there and is becoming increasingly saline. Trial of morsi is beginning in Egypt. Mubarak held in same police college. Mubaraks chances are better looking than morsis. Ironic hai kafi. Morsi refuses to recognize legitimacy of the court. Other members of brotherhood also being tried. Number of those cases judges have excused themselves cos they are not happy with proceeding but the trial will go ahead and happen when they find suitable judges. There are ppl protesting against govt over morsi trial but still a lot of support for current regime and general cici. He blamed the west for conspiring against Syria keeping the civil war going. He points to continue failure of the free Syrian army to provide any kind of effective command and control over its alleged groups. We have an FSA which claism to be military commander of revolution. Theres one major hardliner islamist coalition outside it. There is a second larg islamist coalition that cooperates with it but isn’t under its command structure. There this whole series of militias and literally huundreds of militias in Syria. And those that claim they are part of free Syrian army, well free Syrian army is kind of a label, its not really acommand and control structure of what is to be done. It does play a role in assistance. FSA holds together cos its kinda engaging in patronage that is groups, groups adhere to FSA cos they get money that way and they leave fsa cos they are not happy with the flow of money which is largely coming from Saudis and qataris and some from US too. We have also seen the Saudis expressin a great deal of unhappiness with US over a range of issues. Relaxation of tensions with iran. Arab Israeli conflict. And us policy in Syria when us din bomb Syria over chem weapons. Saudis are apparently going to step up their opposition and resistance to the opposition without waiting for US. Like US earlier this year decided to begin to provide more lethal weapons to Syrians, cie is currently training rebels in the south. But they are training very few ppl. so it really has no impact. Now us has been since Syrian uprisings started, has been sayin to saudia that don’t give money and weapons to alqaeda affliated groups but saudia is now like y should we lsn to US cos us isn’t doing much itself. Wthr infact Saudis and qataris do that remains to be seen. Its not like u provide money and weapons and it automatically is used in the good sense. Also probs with getting money and weapons to ppl. like u give em to someone and then to someone and then someone. So like supply chain may have leakes in corruption etc. no one has access to Syria. Qataris and Saudis and us are not in Syria and are on borders and cant afford to put ppl inside Syria cos its too dangerous. Very poli risk for getting cie agents in Syria cos if they get caught then a lot of poli risks. Also militias control different territories. It was different in Libya cos there eastern part, much of southern and southe western part of Libya was not under regime control so u cld drive their areas quite safely. U cld move around relatively securely. There were multiple militias. There was some occasional fighting with in. there was like u attack first and we follow cos of mine fields. But it wasn’t like u drive for 15 km and middle 7 km is controlled by alqaeda like in Syria. There was a clear frontline in Libya but in Syria some regime controls this opposition control this u turn a corner and u see a checkpoint suddenly u don’t wanna go through. So very lil covert instructure of these external factors supporting the Syrian rebels. Resignation  simply a sign of mounting frustrations with the scene. You need unity of effort in a military scene. U don’t want mini wars but u need some central command scene. population and employment Until recently population was growin ▯ labour force grows ▯ youth bulges ▯ you need jobs. Rate of growth beginning to declining.  But middle east has large large large increase in labour force. N mena has above avg unemployment rate. Demog transition ▯  birth rates finally began to decline, they are a bit sticky, they don’t decline immediately. Partly cos they are kinda culturally  entrentched. Death rates decline cos of improving tech and healt care. So u have this birth rates high with declining death rates  with population growing and then birth rates decline too. Lots of middle east countries which have the population under the age  of 18. When u get to the democ transition and birth rates finally began to fall. This bulge may move through the pyrimad. And so  bulge kinda moves up. When they are in middle you potentially have a major econ advantage. Cos when this bulge was below  they wwere children with high dependency rate. When u go to industrial country where there are a lot of high proportion in top u  also have high dependency ratio like in Italy and japan.  Youth bulge: both a challenge and advantage cos u have lot of potential workers with low dependency ratio But challenge is lot of ppl who need jobs. What middle east has is that it has a lot of ppl at youth bulge but it doesn’t have jobs.  So large unemployment youth.  Unemployment stats can be a bit misleading. Cos it records former employment i.e a legal job. It may not indicate the informal  sectr (illegal or unregistered job) the other thing is wthr ppl are appropriately employed that is to say their jobs correspond with  their level of education and skills. People might be mployed as construction workers or farm workers even thought they might  have a uni degree.  60s 70s 80s in middle east ▯ rapid growth of proportion of population in first primarcy and secondary school and then higher  even in most arab countries. But problem: if we have done quite well in educating our youth, when those youth hit the job market  they cant find jobs or they cant find jobs of their level then u have probs of dissatisfaction.  Rapid population growth Ł rapid labour force growth ▯ failure to create employment opportunities in keeping with increasing  labour force, expansion of education coupled with ppl not finding appropriate jobs is a potential recipe for discontent.  population and employment Female participating in MENA has certainly increased but not utna jitna rest of the world mey hua hai. Why is female participation rate very low? You can talk abt islam but have larger rate in Bangladesh so variation amongst Islamic countries Oil? It generates wealth but very lil employment. What employment it does generate tends to be in areas which are not traditional for women. Where in bangla a lot of women are involved in txtiles where women go from sewing in houses to sewing in factories etc. less reason to have a second earner in the house cos if generally high levels of living. So in oil economies less desire for second earners in home. Arguments also made abt the regime like if regime is linked to tradional scene then it will go towards these conservative policies like in saudia opver debate over driving cos u don’t wanna upset the conservative ppl. but in Tunisia the bourgiba saw the traditional clans shit as opposition and was with its urban middle class support and that’s y was so more liberal in these things Consequence: lost economic growth. So world bank has done a lot of work on this and go like hey u know ur losing econ growth cos of this. Social and poli consequences Iran  revolution  women access to labour force restricted  by  new regime/islami revolutionary regime which was quite conservative  now changed  high female participation  cos  giant war  iran Iraq war (much like ww1 n ww2 brought women in the labour force in europe and America)  key role  millions of men who weren’t working and u needed women to work and so a lot of irans gender conservatism gone. So contrast btw Saudi and iran over involvement of women. That’s not the only reason though  iran never had this powerstructure of relying on conservative tribal elements neither under shah or the Islamic regime but the war did push it towards acceptin women working and having gone that way u can go back completely. political economy of the MENA                       region  significant government role in economy   employment (large public sector) (exception is lebonan which has any public sector at all and what it has doesn’t work very well)  subsidies (significant consumer)  trade, business regulation (significant but has eroded in last 20 years to some extent)  weak governance (poor quality administration,  very lil accountability: in the macro sense of not being democ but also in the  capacity of citizens not being able to complaint about govt officials) Monarchies  wanna show that king is lsnng  petitions where ppl come to king an complaint occasionally but its more of a show than a fundamental structure of accountablility within the system population and employment • relative decline in size of large public sector employment cos structural changes and reforms since 90s. + urbanization = large informal sector in some countries a lot of countries used public sector employment to deal with unemplopyment. Like in Egypt during  Nasser u were guaranteed a govt job for a while provided u complete uni. ▯ less of it with reforms in   90s  role of government So historically large but not certainly efficient public sector. role of government business environment/reform Governance Argument: as countries become more developed there public sectors become more efficient. But in middle east how ever it’s a  flatter line that increase in development does not result in better improved quality of public service. Part of the reason is that high  income oil scene don’t really care abt public admin efficiency cos public employment scene is part of their patronage systems.its  not there do an efficiten job.  The second chart on right shows the degree of public accountability. In general as countries econ developed theres higher  degree of accountability middle east  line is flat where theres no evidence that higher level of development leads to more  accountable public sectors.  corruption poverty and inequality Its one of the grievances that drove the arab spring.   Tunsia is actually comparrtively low on the corruption thingy on the graph on left.  Second graph is about asking ppl if they have ever payed a bribe agains how corrupt  they think their politicians are.  Again Tunisia. Vast majority of population says it has never paid a bribe. And yet this  the country in which govt corruption drove a mjor rebellion and overthrow of a dictator  and started the whole arab uprising shit. So an interesting puzlle. So part of the  reason might be that the perception of corruption in Tunisia was high level corruption,  giving money to elites. Not the petty corruption. Still puzzle cos of measurable levels  of corruption and  public perception of corruption within a society. Povrty rt Inqulity ws  mjor rivn in t r sprin Tt lits wr
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