Economics

Reprinted from the Middle East Studies Association Bulletin, Summer  2001 (with changes in orthography to HTML standards).
Copyright 2001 by the Middle East Studies Association of North America

State and Private Sector in Algeria: The Politics of Rent-Seeking and Failed Development, by Bradford L. Dillman. (State, Culture, and Society in North Africa) 172 pages, notes, index. Boulder, CO: Westview, 2000. $55.00 (Cloth) ISBN 0-8133-3757-7

In this well researched account of Algeria’s economic ills, Dillman sheds invaluable light on the private sector and its unhappy relationship with the state. Following the work of the late Djillali Liabès, State and Private Sector in Algeria is the first book in English to focus on the real nuts and bolts of Algeria’s political economy. It also reveals how other Arab political economies have equally suffered from ambitious state-led industrialization policies. The command economies were never really commanded, and their residual private sectors escaped the clumsy efforts to control them.

Algeria’s private sector operated in a hostile environment—indeed, President Boumediene’s economic czar in the 1970s, Belaid Abdesselam, seems consciously to have created a climate of insecurity to discourage private investment. Consequently, most private sector operators kept their fixed assets to a minimum and sought quick returns on their investment. Most entrepreneurship was concentrated in commerce, construction, and small-scale manufacturing. Dillman devotes a chapter to each of these sectors, and to the foreign exchange regime that defined the parameters of their rent-seeking activities. Successful rent-seekers obtained the foreign exchange to import the parts and materials, or gained access to the intermediate goods produced by public sector enterprises at bargain prices, to make big profits in manufacturing niches.

By fits and starts Algeria has been liberalizing its economy from the early 1980s to the late 1990s, but the private investment climate remains problematic. Apparently Algeria managed to attract almost one billion dollars in direct foreign investment outside the hydrocarbons sector between 1993 and 1997, a figure Dillman considers to be low but which still seems miraculous, given the violence in Algeria since 1992. State monopolies on foreign trade were abolished in 1989, and were reintroduced in 1992 only to be abolished again in 1993. But, privatized though it may be, the big foreign trade in various commodities is apparently monopolized by the friends of leading military officers, and the prevailing security climate tends to protect these racketeers.

The models of the rentier state and the Asian developmental state do not provide much help in understanding Algeria. The rentier supposedly loses its extractive and regulative capacities. But the Algerians were rent-seeking, indeed pilfering the yachts and villas and various other biens vacants of the departed colonists long before oil became a major factor in government finances. Algeria’s was indeed a minimal political system, but not because of oil, rather because of the devastating circumstances of its colonization and subsequent struggle for national liberation that flattened out society and destroyed elites and other intermediaries. History denied Algeria the possibility of ‘embedded autonomy’ along the lines of the Asian model of state-business relations. Algerians indeed inherited the carcass of a French colonial administration and learned more or less to run its machinery. But the business class was too thoroughly compromised by its colonial origins to survive the chaos of Algerian independence and the subsequent revolutionary bath into which Boumediene drowned it in the early 1970s. Experiences of post-totalitarian authoritarian regimes may be more relevant to Algeria than Asian tigers.

This book is strong on the details of private sector market shares, employment, and patterns of investment, complete with vignettes of micro-enterprises and their strategies of survival, as gleaned from some of the informants Dillman interviewed in 1990. It offers an excellent account of a little studied or understood phenomenon of the putative command economies in the Arab world, the evolution of private sector activities under the umbrella of heavy and unaccountable state spending.

Clement M. Henry
The University of Texas at Austin


Hadrami Traders, Scholars and Statesmen in the Indian Ocean, 1750s-1960s, edited by U. Freitag and W. G. Clarence-Smith. 392 pages, index, bibliography, maps. Leiden, The Netherlands: Brill, 1997. Euro 105.98 (Cloth) ISBN 90-04-10771-1

This interesting collection of scholarly essays is about the long neglected history of Hadhramaut (Southern Arabia) during the modern colonial era, together with the history of Hadrami colonies in the Malay world, Southern India, the Red Sea, and East Africa. Written by participants in an international and interdisciplinary workshop held in London in 1995 at the School of Oriental and African Studies (SOAS), the essays in Hadrami Traders focus on four different sections: 1) politics, local and international, 2) social stratification and integration, 3) religious and social reform, and 4) economic dynamics. As clearly explained by Clarence-Smith in his introductory survey, the surprising and quite extraordinary patterns of Hadrami ‘Diaspora’ highlights the role of non-western capitalism, islamization as well as the controversies which raged with Islam, British and Ottoman strategic concerns, social antagonisms in southern Arabia, and the cosmopolitan character of coastal societies. Hadramis spoke Arabic and belonged to the Shafi’i rite of Sunni Islam. Their level of integration with host societies often protected them from persecutions, which historically afflicted other Diaspora, plus, stresses Clarence-Smith, their ‘limited’ migrations to the lands of Shafi’i Islam reduced their impact on the global level (pp. 2-7).

Co-editor Freitag deeply analyzes the role played by Hadramis in international politics during the nineteenth and twentieth centuries. The benefits from international rivalry in the western Indian Ocean were destined to end soon for Hadrami communities. Nevertheless, Freitag remembers the cleverness often applied to the international strategies of this people living and trading in areas of “marginal interest to imperial powers of the times” (p. 130), a common character belonging also to other ethnic-religious groups of the Arabian Peninsula, such as the Ibadhi sultans of Oman. The main conclusion, which emerges from the majority of the many and outstanding contributions, is that the Hadrami Diaspora was for centuries a trade Diaspora.

Beatrice Nicolini
Università Cattolica del Sacro Cuore



The Globalization of Business and the Middle East: Opportunities and Constraints, by Masoud Kavoossi. 161 pages, index. Westport, CT: Quorom Books, 2000. $65.00 (Cloth) ISBN 1-56720-203-9

The Globalization of Business and the Middle East contains ten essays on the political economy of the Middle East (ME) region and the potential for economic integration among the countries in the region. The manuscript is organized as follows: chapter one assesses the strengths/weaknesses of the region and mainly examines the Gulf-oil states. Chapter two examines the privatization of state enterprises in Egypt and Iran and notes the inefficiencies in the process. Chapter three is an essay on how concepts in the Koran influence consumer spending and saving decisions in what the author calls the Islamic ME society, where Islamic laws and institutions prevail (p. 25). Chapter four, jointly written with Frank, is a specialized chapter on the usage of the English and non-Arabic languages in the contents of forty advertisements studied by the authors. Chapter five states the author’s views on what ‘Islamic management’ is like. Chapter six is devoted to the development of the Islamic Banking system. Chapter seven explores the potential for a ME free trade region. Chapter eight examines the economic cooperation between Azerbaijan, Iran, and Turkey. Chapters nine and ten examine the export policy and agricultural imports of Iran. One general theme of the book is a call for more economic cooperation and financial flows in the region.

The Globalization of Business and the Middle East has a well-written section on the development of (interest-free) Islamic banking and on their seven types of profit-sharing agreements (pp. 73-80), and an informative Chapter eight on the history of the Economic Cooperation Organization in the 1990s. Nevertheless, the book could provide more discussions of literature surveys, more regional economic history (pre-1970s), and better empirical data to back the author’s assertions and hypotheses. For example, statements such as the “painful choice between modernization and Islam…seems no longer to be relevant any more” (p. x), “the US is no longer perceived as a superpower by many in the ME, merely a great power. Having decided that only superpowers count” (p. 2), “the Islamic system, by virtue of its very nature, maintains a high rate of savings (p. 32),” need further discussion and empirical validations. Chapter five is controversial in its application of Islamic principles to management and its call for the “best and the brightest” (p. 59) citizens to join government bureaucracies. Chapter seven relies mainly on the history of western economic literature and ignores the history of the region (the author puts the origins of the ‘most-favored-nation’ trade status in Western Europe in the 1860s, completely bypassing the Ottoman capitulations of the sixteenth century and the colonial trade patterns of the region with England).

The views of the author portray the political sentiments and wishes of many residents of the ME. Regardless of the apologetic tone for the Islamic states in the region, The Globalization of Business and the Middle East is interesting for those who are exploring the concept of potential economic cooperation within the ME region.

E. Mine Çinar
Loyola University, Chicago



Economic Liberalization, Democratization and Civil Society in the Developing World, edited by Remonda Bensabat Kleinberg and Janine A. Clark. 302 pages, index. London, UK: Macmillan Press LTD, 2000. $75.00 (Cloth) ISBN 0-333-71708-2

Empowerment of civil society in developing countries from the perspective of the international development organizations (IDO), such as the World Bank (WB) and the International Monetary Fund (IMF), is one of the likely outcomes of economic liberalization. The objective of Economic Liberalization, Democratization and Civil Society in the Developing World is to challenge this assumed causal relationship between economic reforms, which entails significant withdrawal of the state from the economic sphere, and democratization. Kleinberg and Clark, the editors of this volume, state in a comprehensive introduction that sets its agenda that “in particular, we question whether economic structural adjustment will translate into withdrawal of the state at the grassroots level” (p. 5).

The book is divided into four parts, each with a regional focus—Asia, Africa, the Middle East and North Africa, and Latin America. Each part covers three countries in a given region. Six out of twelve case studies examine specific NGOs within civil society and their role in and relationship to economic reforms. These include case studies of Indonesia (Sidney Jones), the Philippines (Gerard Clarke), Egypt (Clark), Uganda (Susan Dicklitch), Malaysia (Francis Kok-Wah Loh), and Nigeria (Funso Afolayan). Articles on Jordan (Pete W. Moore), and Mexico (Kleinberg) are concerned with the relationship between the business community and the state. Case studies of Kenya (Julius E. Nyang’oro), Argentina (Viviana Patroni), Tunisia (Stephen J. King), and Nicaragua (Katherine Isbester) focus on political parties, the labor associations, rural community, and women’s groups, respectively.

These country studies provide a mixed message. On the one hand, human rights NGOs in the Philippines, private newspapers and media in Nigeria, and the women’s Health Network in Nicaragua have all been relatively effective in introducing or promoting democracy. Also, Malaysian NGOs have achieved a certain success in the field of environmental protection, while in both Jordan and Mexico the private business sector has emerged as the most powerful segment of civil society. On the other hand, a combination of state repression, concessions, and regulations has circumscribed the operation of civil associations in Egypt, Uganda, Indonesia, Argentina, Tunisia, and Kenya.

This collected volume, however, raises some neglected issues, and rightly reminds the reader that the fragility of civil society in these countries transcends the presence of oppressive states. Civic associations may be well intentioned, but not necessarily participatory or democratic. Patroni’s study of Argentina clearly points to the prevalence of undemocratic practices within the labor movement itself. Also, this volume’s case studies of Kenya, Uganda, Malaysia, and Indonesia indicate that politicization of ethnicity in these countries has been an obstacle to the development of civil associations. Nyang’oro’s study of political parties in Kenya indicates that the biggest obstacle to democratization in Kenya “is the problem associated with ethnicity and the use of ethnicity for political purposes” (p. 103).

Economic Liberalization, Democratization and Civil Society in the Developing World is a good read, although its treatment of economic reforms is not entirely satisfactory. The implicit assumption posed by the editors in the introduction is that economic reforms have been effectively implemented. Economic prosperity, which is supposed to be induced by the effective implementation of reforms, is indispensable, at least from a theoretical perspective, for the creation of ‘political space.’ Nevertheless, several countries, including Argentina, Egypt, Jordan, Mexico, Indonesia, Nigeria, and Kenya, have been slow to implement economic reforms. The resistance of various social groups to such reforms circumscribes the effectiveness of the reform process. To equate the introduction of economic reforms with their effective implementations understates the complexity of the reform process in developing countries.

Parvin Alizadeh
Denison University



Rural Labor Movements in Egypt and Their Impact on the State, 1961-1992, by James Toth. 234 pages, notes, bibliography, index. Gainesville, FL: University Press of Florida, 1999. $55.00 (Cloth) ISBN 0-8130-1650-9

Rural Labor Movements in Egypt is a remarkable book on tarahil workers (internal migrant laborers) in Egypt. Based on intensive ethnographic fieldwork with migrant laborers and supplemented with a thorough knowledge of the larger economic and political context in which migrant labor occurs, the book is an ingenious blend of micro- and macro-level analysis. Not only does it give a detailed ethnographic description of tarahil workers’ lives and choices, but it is also unique in conceptualizing the interconnections and continuities between rural and urban, agricultural and industrial life, and showing their interdependence and complexity. Toth argues, using regulation theory, that tarahil workers, though generally thought powerless, do exhibit some agency in negotiating the conditions of and compensation for their work, and that this agency has far-reaching, if unintentional, effects on the economic and political life of the nation.

The Egyptian economy in the 1960s relied heavily on agriculture to provide food and export crops to feed the population, earn foreign exchange, and subsidize the government’s program of industrialization. Egyptian agriculture, in turn, was highly dependent on an adequate labor supply. This labor was provided by landless or near-landless rural laborers who were needed only on a seasonal basis. Hence, rural workers were forced to find other sources of income during the off-seasons, most notably in tarahil migrant labor gangs organized on the basis of kinship and paternalism by a village-based contractor. As a consequence, the government embarked on ambitious development plans which changed the conditions under which the old effort = wage = price formula was negotiated, and drained labor and capital from the countryside. Many rural workers left village agriculture for jobs in construction and land reclamation. This movement contributed to an economic crisis in the state, as agricultural labor shortages led to a decline in the crop yields on which the government depended for food and foreign exchange.

In the following decades, labor migration abroad to the oil‑rich countries of the Gulf created yet more opportunities for off-farm employment. Many workers who had previously alternated between village agriculture and tarahil work now opted for permanent urban employment if they could find it. And when they could not, they then swelled the ranks of the urban discontented rather than return to their former lives as rural tarahil workers, which in turn exacerbated the political and economic pressures on the government. As one can see, Toth’s argument is complex and multi-layered. Nevertheless, his main point is that workers, by leaving agriculture and opting for urban, non-farm employment, contributed to the agricultural crises which prevented the Egyptian government from reaching its economic goals, and this in turn fueled political discontent. In this way, the study shows that no matter how marginalized workers might be, their inherent ability to subvert the plans of those elites at the top who are nominally in charge gives them a critical agency. While one may differ with Toth on how much causative weight one can legitimately attribute to workers’ agency, this emphasis is a welcome relief to the strong macro-level determinacy of most studies of political economy, a reminder that real historical movements involve an analysis of both the micro- and macro-level factors involved, and that ordinary people can have an effect on history.

Besides the main argument of Rural Labor Movement in Egypt, one should also note the many excellent and detailed analyses of particular aspects of his argument which are elaborated in the book. In addition, Toth’s detailed knowledge and shared experience of the lives of tarahil workers gives a vivid portrayal of Egyptian social and economic life as seen from the bottom up, which will be of value to scholars and students alike.

Barbara K. Larson
University of New Hampshire