From Cornell International Affairs Review VOL. 3 NO. 2
Elusive Economic Development in the Maghreb and Beyond
However, their enforcement results in some difficult national and international economic and political negotiations. The sizeable investments made by Renault Maroc for its industrial branch in Tangiers are particularly important; they improve its bargaining power with the tax administration and, as is the case everywhere in the world11, lead the administration to deal with this "tax avoidance" by means of a flexible enforcement of the tax code. This is because the administration does not lose sight of Tunisia and its other competitors that display a readiness to practice tax dumping and the fact that Renault will create job opportunities in Tangiers (6000 direct employments and 30,000 indirect ones), bring technology and knowhow.12
The evidence presented shows that FDI does not systematically create wealth, although they can act for a period upon the host country's volume of currency reserves. Portfolio investments and equity participation, accompanied by take-over, result in important, and sometimes exaggerated earnings for technical assistance and other services. They also entail the payment of interest on authorized advances, the sometimes excessive distribution of dividend and as a last resort the realization of capital gains (and on occasion losses). On the other hand, construction or extension investments aid in the creation of jobs, the transfer of technology and in knowhow; they can also contribute to the creation of competitive advantages and therefore to economic development. The remunerations of subsequent interventions are then allowed without discussion.
For Algeria, however, no summary could permit divesting responsibility from a coherent development strategy adopted by the government. The state's economic policies, much more than its social policies, seem more reactive than proactive, despite the Growth Support Complementary Plan (a policy to which the US gave $180 billion over a fiveyear period). The growth rate achieved by Algeria during the last four years reached an average rate of 5%. What significance can be afforded this level of economic growth when it is largely stimulated by public demand (more than 50% of the GDP in 2007), and when it is supported by oil revenue which stands for more than 98% of exports? These revenues revealed a 12% GDP budget surplus and made $108 billion of currency reserves. Nevertheless, no economic sector activity generates a sufficient value-added for diversification of exports.
The Algerian leadership's responsibility in the role of economic developer, in regard to the spending of the state, is becoming increasingly great compared to those of its neighbors, who do more with less, despite the classification of the UNDP.13 Algeria could have, given its quality of human capital and the importance of its resources, acted as an engine of change for the Maghreb. But, the proper conditions for the release of the human capital, the materialization of some initiatives, and the allocation of development shares to human capital have failed to be put in place. Instead, these systems seem rather to be discouraged if not foiled.
The Algerian financial system lacks fluidity. An efficient banking system tries to assert an efficient allocation of funds, at least when securing the credit payment which itself goes through the viability appreciation of the investments to be financed. The Algerian banking system has not really secured its first mission, much less optimized resource allocation. It does not meet the basic condition for paving the way to development: the fluidity of financial relief for development.
One can also wonder about the level of banking service used by the Algerian population, even among wealthy. The majority of banking services currently manage operations budgets. Even in important transactions, fiduciary money is still more widely used than deposited monies; this is mostly like due to tax considerations and general tendency to favor the materiality of money. A great part of the money supply circumvents regulations because it is held in piggy banks and safes when not exchanged, therefore is it degraded against the euro.
This is to say that the efficiency left to the monetary policy is limited despite its being a "strong" tool for economic policy which cannot be ignored. A cope of defiance seems to be shrouding the whole country. These deficiencies are beyond all comprehension and can only arouse feelings of grief for a country like Algeria.
The Algerian leaders' negligence is best explained by the important, yet dwindling resources drawn from oil revenues. These revenues allowed for the development of soporific policies that permit the government to remain condescending, imbued with selfcomplacency and unrepentant about its choices. This is because government officials are conscious that sources of private income and other privileges will not be able to resist development nor resist in a long-term manner underdevelopment. This fact must be understood.
Concerning foreign trade, the Algerian open trade initiatives are partly thwarted by the irresoluteness of the leaders who are in no hurry to act. They claim their longest negotiation period was to join WTO, which took twenty years. Additionally, the January 2008 round was not conclusive either. They floundered on finding a solution for the service sector and for gas prices, which are both issues of great interest to leaders. Gas prices, an issue that they would really like to continue to administer over, the Algerian leaders forget, it seems, that the price that has been accepted for gas in France is not the market price of gas, but an expiatory compensational and repentant price.
In Algeria, the intensity of political life tends to check the intensity of economic life. In fact, politics is indispensable for confidence in capital to commence, to take risks, and to create wealth. The fleeting new growth of Algerian capital, legal or illegal, that is invested in France or is deposited in Switzerland are precisely in the vein of this confidence, even at the price of negative outputs. It is not haphazard that the most prosperous and most developed regions of the world are those where the intensity of political life is the weakest and where political life is virtually reduced to a quest for greater efficiency of regional administration and local governance.
Finally, and in more general terms, the Maghreb has also yielded to the new liberal tendency, hence the necessity to reconsider the perimeters of its state's assets and the fulfillment of privatization.14 While being at an advanced stage both in Morocco and Tunisia, these processes are less significant in Algeria. Still, one can pinpoint a similarity between the states' economic disengagement, despite the difference in these countries' respective levels. Most of these privatization operations consisted both in denationalizing and politicizing the state's economy.
These measures had a negative influence. Admittedly a state without policy is much preferable to a policy without a State. In the first case, there is no room for any political interference, and the efficacy of the state is the main objective. In the second case, substituting the state with a cadre that personifies power and comes from the innermost circle or have some political connections is very often translated into clientism, favoritism and preferential treatment. This creates more defiance and consequently exercises an explosive action by pushing away some economic initiatives from materializing into economic activity.
Economics, Politics and Religion: What Direction to Take for Social and Economic Development
The evolution of development economics—provided that development economics exists and that it is not only reduced to applied economics — will solidify through the contribution of political, sociological and anthropological perspectives, in addition to public governance. In other words, new transversal concepts that will call upon more imagination—and some daring applications —must be explored.
The world economic crisis, which is just beginning, promises some hard times for the South and North alike. The Maghreb's economic relationship to Europe and its inability to operate under regional integration will force it to undergo the effects of this economic crisis head on. Nevertheless, the hard times on the horizon can be taken advantage of if deep reflection is followed by the launch of stringent reforms. Such actions could even put the Maghreb in a leading position to either trigger or consolidate development processes when more favorable economic times return. Alone economic policies cannot extricate a country from underdevelopment or keep poverty at bay.
All in all, in Morocco and Tunisia, the least disputed economic policies are already at work and acting with variable degrees of success. In these countries, economic growth by means of capital accumulation, productive gains and the increase of the necessary savings for these investments is very encouraging. The volatility of the governmental policies concerning the macroeconomic policies are better contained: the management of demand by means of monetary and tax policies and by a exchange rate policy is making room for more stability and visibility than ever before. Extroverting their economies by means of free trade agreements (FTA), the suppression of quotabased barriers and the gradual softening which ultimately should lead to the elimination of tariff barriers were launched many years ago. Morocco was even considering a liberalization of foreign exchange besides that of trade. As confirmed by the IMF, however, that the growth rate of the last five years has fluctuated between 5 and 6%, means Morocco's economy still remains insufficient15 to absorb the unemployment and poverty.
If the liberal reforms and the economic policies prove to be insufficient for diminishing poverty, what type of reform could be significant enough to oversee that the socio-cultural and politico-institutional plans reinforce cohesive action?16 Another observation stems from the trilogy made of politics, religion and development. Concerning this "triptych," the Maghreb countries' governments adopt some antinomic postures that seem paradoxical. Out of attempts to legislatively prevent the mixing of politics and religion, they end up mixing religion with politics, all the while resolutely promulgating legislative texts in an effort to keep the two domains apart.
Indeed, the Maghrebi governments try to break the monopoly of religion by untying the "political religious parties" from the populace, and then they try as hard as possible to win back the religious parties sympathy. In doing so, governments try to recover religious practices and are practically competing with their antagonists. Rather than limiting or even inverting the development of the political and the religious sphere, these governmental policies widen the base and add a cultural dimension to the religious references. Religion is used in both politics and economics, while neither of these institutions are moral or want to become moral.
Any attempt at moralizing economic life through the use of religion means rising up against the values, without which no single important economic activity can be conceived of in the first place and no plan of economic or social development could be possible. This is all the more true in states where the ‘leisure' economy occupies an important place. When applied without any abuse of authority or corrupt practice to delegitimize the resort to religion and reassure investment capital holders, commercial law or general law may become more coercive and dissuasive. It can even display a greater capacity to organize and make business links more fluid than religious ties which, in some adapted cases, is the very source of these laws.
However, the individual practice of religion should continue to be scrupulously respected and facilitated. Religious practice should never exclude secularism (laicité), even in unthreatening homeopathic doses, from the state and economy. A state's religious practice and secularism are not mutually exclusive. Rather, it is governmental frailty coupled with frivolity, which creates this belief of mutualexclusivity. Furthermore, governmental interest in politics over economics (which, in democracies, are strongly intertwined and in developing countries can be, too) does not make a strong campaign for secularism. Religion can secure social and political stability, ensuring a leader's legitimacy, unlike secularist policies, which tend to be viewed as extremism.
The observation of acquiescence, whatever the circumstances, brings an assimilation of poverty with divine will and also to the resentful acceptance of destitution. This fatalism works like a shock absorber for social tensions and contentions. For these reasons, it would seem suicidal for governments to do without it. For these reasons too, no observance can be made concerning any true socio-economic activism which might alter these beliefs. Most certainly, policies of secularism were much more at ease in the past than in the present. A first measure that should be taken is to progressively depoliticize and secularize education. The reasons that used to account for the introduction of more religion in schools curriculum17 are not timely anymore.
The desecularization occurred during a time when the aims were to cannibalize collectivist ideologies that were infiltrating and posing a real threat, especially in Morocco. The present governments have fallen into the trap their predecessors created to ensnare the state's former opponents, not suspecting that they were building a platform for the radicals of today.
As we consider the responsibilities of economic and social development, a quick response might be that responsibilities are proportional to the power held by economic agents. This is in reality only partly true because of interdependence and overlap. Even a hierarchical organization of such responsibilities would only elicit a minor interest because, continually, they only elicit intellectual and contextual development. One has to keep in mind, however, that it is not only with a national mobilization that development process can be launched. This is the common attitude adopted by settled states. After a phase of mobilization a lull generally follows, during which the old problems resurface.
Economic and social development is not just a matter of resolutions and economic policies, nor is it a linear process, as we are reminded by the present day crisis. It is rather a matter of maturation cycles, and temporality in the sense of a "before" and "after" succession, as well as in the sense of a temporal dynamics where a before phase may become an after phase, and where the causes may become the effects. These maturation cycles and temporalities presuppose the cultivation of certain values and the promotion of certain policies. Development is foremost a matter of collective responsibility, where everyone should be whole-heartedly involved. Development is a matter of creating trust to increase the intensity of entrepreneurial activity, strong involvement, and collective reflexes to contain the volatility of policies, power and reaction, which is borrowed from altruism and pragmatism. Development is also a matter of widening the socio-cultural base at the regional and world level. These policies might look laborious; nevertheless, starting their pursuit may improve many aspects of economic and social life.
Development is no short-term job. These issues should be put back at the heart of national debates. Once released, national energies can take control of more promising initiatives. The complexity of the development problems and the uncertainty about new policies should remind politicians to focus not just on prerequisites for development, but also on follow-up policies (e.g. corruption control). In this way, more reverberations in the population can be spotted and more political dividends shared. Reflecting on issues geared towards the adoption of the most convenient development policies seems to fall today on the share of multilateral organizations who, from the height of their observation towers, inform people about some rare success stories. What is for sure, however, is that transpositions have hardly ever been so. They fall through because of the lack of preparation, the idiosyncrasies of each country, the risks of instability.
This also implies the country's inability to implement major reforms politically, culturally, socially, culturally and institutionally. It is true that the debate has not been settled on which reforms to settle first. One can still think that these reforms are interactive, and that under the pressure of either progress or hindrances; either these or those reforms might occur on the ground of opportunities. It is usually said that poverty stricken, autocracy driven and resource-less countries have virtually no chance to develop.
On the other hand, natural resources and democracy are seen as prerequisites for development. We can see that no oil exporting country is truly developed, that China, which is not a democracy, now overshadows France economically and that Japan has virtually no agriculture. No apology for totalitarianism is being made here, but what is at stake is to draw the outlines for analysis. Meeting the requirements for a human being's political rights, which – in other words – stands for democracy, cannot resist eternally to the non-fulfillment or satisfaction of this very human being's elementary economic rights. Democracy and economic rights interact with each other.
Numerous are the African and Maghrebi citizens who risk their lives in order to reach Europe by trying to cross the Mediterranean, in a quest for peace; nothing more overwhelming could be imagined by a person with the most infinitesimal portion of responsibility. This emphasizes, in an alarming manner, the urgent necessity to actively devote ourselves to this task, so that risking one's life while trying to extricate oneself from poverty is no longer a concern.
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