ARAB COUNTRIES: DEVELOPMENT MODEL CRISIS*

V. A. MELYANTSEV

Doctor of Economics, ISAA, Lomonosov Moscow State University

Arab countries Keywords:, crisis, unstable growth, inequality, social protests

The social explosion in the Arab countries (AU) is caused by many factors, but it is based on the crisis of the limited modernization model, which has led to the disproportionate, extensive and slow development of the region.

Arab countries, we recall, did not always lag behind. By the 9th - 10th centuries AD, the region had a relatively high level of development of trade, crafts, culture, religious and secular education.

According to our calculations, in the XI century AD, Egypt, lagging behind China in terms of per capita GDP by about a quarter, was more than one and a half times higher than the then Western Europe (WE). By Human Development Index (HDI)** Egypt, a third behind China, was almost twice as fast as the ZE. The average grain yield in the Middle East and North Africa (MENA) countries, although it was about a third lower than in Chinese China, was 4-5 times higher than the same indicator in the West. The level of urbanization in MENA was one and a half times higher than in ZE (excluding Spain). In 900 AD, five of the world's ten largest cities were Muslim. While lagging behind China in terms of literacy by about half, the MENA countries as a whole were 4 to 5 times ahead of the WE (1 to 3%). By 1000 AD, the share of Muslims in the world (14-15%) was already two-fifths greater than that of Christians (10-11%).

The subsequent (by 1800 - almost three - fold, by 1913-1950 - four-fold) lag of the AU from Western countries in the level of per capita income (see graph. 1) and HDI was caused, on the one hand, by the economic recovery of Western countries, which in the 2nd millennium AD formed institutions that contributed to the rapid growth of physical, human capital and labor productivity, and on the other - by a significant slowdown in development in MENA. The latter is largely caused by increased economic and socio-political instability associated with the intensification of destructive external invasions, and a low level of security for life and property.

LAG IN PER CAPITA GDP GROWTH

If in the 1950s and 1980s the average annual growth rate of per capita GDP in the AU as a whole (3.5 - 3.6%) was higher than in the developed countries (WG), and one - third higher than in the developing countries as a whole (RS, 2.7%), then in the last three decades the average growth rate of the Russian Federation as a whole AS (0.5 - 0.7%) was almost three times lower than in the WG (1.6-1.7%), and five times lower than in the whole RS (3.0 - 3.1%). While the average annual population growth rate in the RS as a whole decreased by a quarter (from 2.3% to 1.7%) in the periods under review, it remained virtually unchanged in the AU, remaining at the level of 2.5 - 2.7%. In terms of production growth rates in the agricultural sector, manufacturing industry, and services, the AU significantly lagged behind the DCS of East and South Asia( WHa, SE), many times exceeding them in terms of the coefficient of instability of GDP growth, largely due to the instability of their terms of foreign trade and political situation.

The average annual growth rate of physical exports in the AU as a whole in the 1980s-2000s was almost twice as low as in the 1960s - 1970s, and one and a half times lower than the average for the RS. Despite the progress in improving the structure of exports in some AU countries, the share of finished products in the Arab region as a whole increased slightly - from 2-3% in 1960 to 6-8% in 1980 and 10-11% in 2008 (in the RS - from 13-15% to 42 - 44 and 59 - 60%). The share of high-tech products in the value of exported finished products in 2008 in the AU as a whole (1.8 - 2.0%) was an order of magnitude lower than the average for the RS (21 - 22%). Meanwhile, higher and more stable economic growth rates are typical in the world for countries with a high share of non-primary exports.

* Materials of the author's publications were used (Arab-Islamic world in the context of the global economy, Moscow, 2003; Arab-Islamic world in the 1980s-2000s: trends and contradictions of economic and social development // Vestn. Mosk. University, Ser. Oriental Studies, 2011, N 2), as well as international and national statistics.

** Here is the geometric mean of relative indicators of per capita income, average life expectancy from birth, and literacy of the population.

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Based on our model calculated for 23 countries of the Arab-Muslim world (AMM) over the past two decades, the less dynamic growth of per capita GDP was determined by almost two-fifths of the relatively higher population growth rates; by one-third-by a lower share of non - primary exports (in its structure) and by one-fifth-by a lower share of non-primary exports (in its structure). the level of quality of institutions (approximated in the model by the rule of law index).

Y = 3.66 - 0.83*P + 0.02*M + 1.37*L (p = 0.02) (p = 0.04) (p = 0.09) (p = 0.01)

R2 adjusted = 0.59, N = 23, T = 1990 - 2010

Y Note: and P are the average annual growth rates of per capita GDP and population;

M - the average share of finished goods and services in the export of goods and services over the period;

L - the average value of the rule of law indicator for the period. All the main parameters are statistically significant (at the level of less than 10%). The adjusted determination rate is quite high.

According to another model, the average annual growth rate of per capita GDP in the 1980s-2000s (on average, by more than 4 percentage points) in the AU as a whole lagged behind the RS of the VAZ and UAZ regions by about a quarter due to lower (in the AU) export growth rates, and half due to significantly lower (in the same countries) the rate of expanded accumulation in GDP and by one-fifth-with a relatively deeper real income differentiation in the Arab world (increasing overall instability).

Y = 0.164*EXP + 0.150*NKH - 0.052*GIN - 0.873 (p = 0.0074) (p = 0.0002) (p = 0.0049)

R2 adjusted = 0.809, N - 43, L = 1980 - 2006

Y Note: and EXP are the average annual growth rates of per capita GDP and physical exports of goods and services, respectively, %;

NKH-Extended capital investment rate (share of ordinary capital investment, education and R & D expenditures in GDP), %;

GIN - the average Gini index for the period by income. All the main parameters are statistically significant (at the level of less than 1%), and the adjusted determination index is very high.

INCREASED ECONOMIC AND POLITICAL INSTABILITY

Among the factors that caused the relatively low level, far from optimal structure and low return on investment in the AU as a whole (the coefficient of marginal capital intensity of growth in the 1980s-2000s was one third higher than the average for other DCS), we should include a significant and generally increased economic and political situation in the region instability (in 1996-2008, the last indicator in the AU was 3/4 higher than the average for other RS), excessive state intervention in the economy (the share of government spending in GDP - 34-38% - is one and a half times higher than in other RS as a whole), the slowdown in the reform process by conservative and authoritarian regimes. According to the ease of doing business rating and the index of economic freedom compiled for 2009-2011, the majority of Acsas as a whole were located in the bottom third of two very important global "report cards". According to the index of state efficiency and effectiveness of state regulation, calculated at the end of the 2000s, AS almost three times lagged behind the average for other RS.

Most countries still have opaque banking systems that are heavily controlled by the state. Arab banks, in conditions of limited competition, lack of development of relevant legislation and infrastructure, specialize mainly in short-term, including trade operations, and do not finance long-term projects very much. In 2006-2010, the share of non - performing loans in their total volume reached 8-12% in the AU as a whole, which was on average two to three times more than in the VAZ RS and three to four times more than in India and the WG. AS is characterized by twice as low level of legal protection of borrowers and lenders as in other DCS.

In the second half of the 2000s, in the AU as a whole, total expenditures on human and scientific development (11-12% of GDP) were 1/4 lower than in Latin America (LA, 14-15% of their GDP), and one and a half times lower than in Asian NIS (18-19%) and twice as low as in the WG (22-23%). In the AU, the share of the population's Internet coverage has reached almost a quarter, and young people with higher education-one-fifth. But in terms of its quality, most speakers are in the lower third of the corresponding world ranking. At the same time, 2/5 of adult women are still illiterate. AU lags behind other DCS in terms of specific R & D expenditures (0.2 - 0.3% of GDP versus 0.3 - 0.4% in Sub-Saharan Africa (SSA), 0.6 - 0.8% in LA and South Asia, 1.1% in Russia, 1.7% in the VAZ DCS, 2.7% in the USA, 3.5 - 3.7% in Japan South Korea, Finland and Sweden, and 4.7% of GDP in Israel). In terms of the number of researchers, scientific articles, and patents per 1 million people, ACS, on average, are 2-4 times behind the VAZ RS.

The above reasons largely accounted for the decline in the growth rate of aggregate factor productivity (TFP) in the AU - on average, from 2.1% annually in 1960 - 1980 to (-)0.1% in 1981-2007. This indicator was lower not only in the group of Asian NIS (3.2%), China (1.9%) and India (2.5%), but also slightly lower than in the SSA (0.2%), LA (0.0%). To increase efficiency and international competitiveness, many AU countries need to significantly improve the quality of their labor and capital resources, ensure greater openness of the economy, stability and maturity of social and political institutions (see box 2).

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GROWING SOCIAL PROBLEMS

While in the 1950s and 1980s the Arab world, where economic growth was relatively rapid at that time, was generally moving closer to the WGW in terms of per capita GDP (27-28% of the WGW level in 1950 and 30-31% in 1980), by 2007 it was lagging behind (19-20% of the WGW level in 1950 and 30-31% in 1980). RG) has become larger than even in 1950 (see graph. 1); we are talking about average indicators, since, as is known, in a number of Arabian monarchies the per capita income is not lower than in the Russian Federation.

In recent decades, many social problems have accumulated in the MENA countries. In 1990-2008, they recorded the highest growth rates of the economically active population (3.2%, in the VAZ RS-1.3%, in LA-2.7%, in the South - East - 2.1%, in the SSA-2.9%), which in itself complicates the employment of their residents.

Due to the fact that the population is very young (median age-23-24 years, in other RS-27-28, in RG - 40 years), and women, due to a number of socio-cultural reasons, are relatively little involved in social production, the rapid growth of which is constrained by technical, technological, economic, and social factors. Due to political factors (the latter are discussed below), the share of employed people in the adult population of MENA countries is very small: in 2008 - 45-46%, compared with 64-69% in the WHA and SSA RS and 57-61% on average in the South-East and LA.

The employment rate is particularly low among the young population. In 2008, this indicator was much lower in the Middle Eastern countries (29%) than in the South Asian and Southern Asian countries (42-45%), as well as in the South Asian and Southern Asian countries (49-51%). In the last three decades, the average share of unemployed in the AU has increased by one and a half times - from 8-10% in the late 1970s and early 1980s to 13-14% in the late 2000s. The achieved figure for the AU (including 9-11% in Egypt, Algeria, Morocco, 12-15% in Syria, Tunisia, Jordan, and Iraq, 16-18% in Sudan, Somalia, and Mauritania, and 25-27% in the Palestinian Authority) was almost twice as much as in other DCS, including the VAZ and UAZ DCS-5-6%, LA, and JSA - 8-9%. The share of unemployed among young people in the AU was particularly significant - 23-25% (on average, 9-10% in the VAZ and UAZ RS, 15% in the SSA and LA - 13).

Due to the increase in the share of unemployed people in the Arab World, as well as the acceleration of consumer prices in many of them and the increase in the so-called "anxiety index" (the sum of the two indicators as a percentage), the share of the poor in the Arab world increased significantly during the crisis phenomena of the late 2000s, reaching 2/5, including 29 - 30% in Syria and Lebanon, 58-60% in Yemen and 41-43% in Egypt.

SOCIAL STRATIFICATION IN THE ABSENCE OF "SOCIAL ELEVATORS"

The powerful wave of social protests that has engulfed a number of countries since the beginning of 2011 is largely due to the fact that the population, including the rapidly growing number of young people (more active, educated and well connected through social networks and aware of life in the EU), is seriously tired of living as before. The social stratification between the main part of Arab societies and the corrupt elite, which concentrated huge rental wealth in their hands, but was not able to effectively modernize the economy, reached a huge size.

The gap in per capita income between the richest and poorest countries in the Arab world, which was 62:1 in 1960 and 112:1 in 1980, reached 242-fold by 2010 (Qatar/Somalia), which is ten times higher than the level of cross-country income differentiation in the EU and OECD (10-15). The Gini coefficients specified by a number of researchers, which measure the level of intra-country income differentiation, for a number of AS are not 0.3 - 0.35 (official data), but 0.4 - 0.5, which is about a third higher than in the WG.

The AU's problem is compounded by the fact that in Arabic

Graph 1. Dynamics of the gap in the per capita GDP levels of the Arab world and Western countries, $ by PPP in 2008

Calculated by: The World Bank. World Development Report, 2010. P. 378 - 379; World Development Indicators, 2011. P. 192 - 196; Maddison A. Contours of the World Economy, 1 - 2030 AD. Oxford, 2007. P. 59, 176, 192; Melyantsev V. A. East and West in the second millennium: economy, history and modernity. Moscow, 1996. pp. 61, 145.

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Figure 2. Levels of institutional development, 2007

Notes:

1. SSA - Sub-Saharan Africa, AU-Arab countries, LA-Latin America, AzNIS-Asian new industrial countries (average for the Republic of Korea and Taiwan), WG-average for developed countries.

2. Calculated as an unweighted average of six indicators by D. Kaufman, A. Kray, and M. Mastruzi (political stability, degree of compliance with the rule of law, state efficiency, quality of regulation, control over corruption, and state accountability to society). See: Melyantsev V. A. Developed and developing countries in the era of change (comparative assessment of the effectiveness of growth in the 1980s-2000s). Moscow, 2009. p. 213.

there are no so-called "social elevators"in the world. The rulers sit for a long time, extracting rents and gaining a clientele. And they don't want to leave. Mubarak served, as you know, almost 30 years. This is perhaps the fourth longest-serving record in Egypt's 50-century history. If the calendars do not lie, only the pharaohs Ramesses II (66 years, in the XIII century BC) and Thutmose III (54 years, in the XV century BC), as well as Pasha Muhammad Ali (44 years, in the first half of the XIX century AD) ruled longer.

In principle, the ground for large-scale popular demonstrations in many AS was ready long ago. The fact is that they generally lag far behind a number of other regions of the RS (and some Muslim countries, such as Malaysia, Turkey, and Indonesia) not only in terms of per capita GDP dynamics, aggregate productivity, the scale of export refinement, and the level of innovative economic development, but also in terms of the degree of government accountability and respect for basic human rights (including women), civil liberties, and the legitimacy of government.

It is noteworthy that, according to D. Kaufman, the countries where the values of the indicator of government accountability and respect for human rights are lower than the average in the Arab world include: Yemen (-1.18), Egypt (-1.19), Tunisia (-1.26), Iraq (-1.26), Saudi Arabia (-1.74), Syria (-1.75), Sudan (-1.77), Somalia (-1.85), Libya (-1.9; coefficient varies from +2 to -2). Using data from the Economist Intelligence Unit's December 2010 ranking of global democracy development levels, it can be stated that 9/10 of the total number of AU's are located in the lowest third, and 3/5 - in its lowest quarter.

INEFFICIENCY OF THE ECONOMIC AND POLITICAL SYSTEMS

The mass of accumulated problems associated with the inefficiency of their economic and institutional systems, Middle Eastern societies will finally have to seriously address, because they, unlike the fast-growing East Asian and South Asian states, do not fit well into the promising growth models of the 21st century. Their growing lag provokes extremism. And the world is very tired of it. It needs a dynamic, reforming Middle East. And don't be afraid of risks. In the end, Turkey, Indonesia, and Malaysia embarked on broad reforms and achieved considerable success.

Meanwhile, during the year after the start of the Arab Spring, problems continued to grow, as many countries (including Tunisia, Egypt, Bahrain, Jordan) were gripped by popular unrest. Active military operations were conducted in Libya, Yemen and Syria. Thousands of people were killed, and the economies of these countries were seriously damaged. Tourism revenues have sharply declined, capital investment and FDI inflows have declined, and problems with the balance of payments have worsened.

According to available estimates, in Egypt, the GDP growth rate decreased from 5.1 - 5.7% in 2010 to 0.6 - 1.6% in 2011, in Tunisia - from 3 - 4% to (-)0.7 - 1.8%, respectively, in Syria-by more than an order of magnitude - from 3.2% in 2010 to 0.2% in 2011, in Yemen - from 6.2% to (-)5.5%, in Libya - from 3.3% to (- ) 28-50%.

For oil exporters in the Arab world, who enjoy a relatively favorable environment in the hydrocarbon market, which allows them, among other things, to provide assistance packages to their population (for example, the Saudi "royal gift" amounted to $35 billion in 2011), GDP growth in 2011 is estimated at 5% and in 2012 at 4%, for oil importers - 1.5% and 2.5%, respectively.

Many AU countries still have high (and growing, for example, in Tunisia and Egypt) levels of unemployment and inflation, low levels of food self-sufficiency, and extremely unstable socio-political situation.

In this context, reforms that strengthen institutions, promote economic growth and diversification, activate the private sector, and increase employment are extremely important. However, all this is not so easy in the context of the instability of the global economy, the increasing expansion of competitors from other RS, increasing the export of finished products and a variety of services.

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