Arab nations must keep pace with the world

Why are our Arab economies tottering into crisis? Why are they slipping into real trouble? So much Arab capital is unused, hiding somewhere or fleeing from somewhere else, that commerce has been seriously slowed and, in some cases, almost brought to a complete halt. Many answers and not a few questions were presented in the recent report that appeared in Newsweek.

The problem is not merely the lack of revenue but the absence of modern banks and world class financial institutions which could attract some of our cash that is presently abroad and inject it into our faltering daylight economies.

From 1990 to 1999 the per capita value of Arab economies grew just under one per cent while their populations increased by four per cent. The problem here is obvious and the solution equally so. The report went on to praise the spirit of free enterprise in Islam and described the free flow of goods and money as an Islamic characteristic and the Holy Prophet Muhammed (Peace be upon him) as an "honest merchant."

Suhail Sagr, a professor of Islamic history at Damascus University, says, "The Muslims of that period and down through the ages were active and reasonable and Arab industry was a source of great profit. This is what made them a great civilisation."

This of course is true – recorded in history but at the same time, the question remains: What has happened to the overall Arab economy? Why has it failed to keep up with the rest of the world?

Completely sidelined

Apart from raw materials, there is not much in the Arab world that the world wants. We managed to miss the industrial revolution, the information technology (IT) boom and are now completely sidelined and marginalised in anything related to science, medicine or communications.

Most Arab manufacturing – such as textiles, building materials and foodstuffs – is largely for domestic markets and is generally inferior to similar products made in Asia and Latin America. The few that are competitive often cannot find the capital to carry out their ideas and to grow and expand.

As I see it, the root of the problem has been a lack of planning, a lack of world-class financial systems and too many half-hearted privatisation schemes that are really privatisation in name only.

The single worst problem, however, and the most devastating for the present and in its implications for the future, is the inability of our educational systems to produce thinkers and innovators. The institutions that could transform capital into life and promote creativity and the desire, let alone the courage, to blaze new trails simply do not exist.

Take, for example, the Internet technology boom and the billions of dollars it has generated. Singapore has Internet trade worth in excess of $38 billion! Other countries in Asia can point to similar figures.

As a capital of information technology, the city of Bangalore in India is now the rival of Silicon Valley in California. The countries of what was once dismissively called "Eastern Europe" – not dismissive of course when it comes to world class tennis players – have in recent years restructured their economies based on information technology and financial services. These, I remind you, were the very countries that little more than a decade ago relied totally on a communist economy.

Ireland too has come up with an investment strategy that has paid off and its software development has revitalised the economy. The spirit of free thought and unfettered capital produces people such as Bill Gates in the U.S., Richard Branson in the UK, Azim Premji in India and hundreds of others from around the world.

The IT boom has made hundreds of people millionaires – and 70 per cent of them are under 30! Where are ours?

The dreams, aims and ambitions of those men and women in business and industry around the world are not shackled by archaic laws, ridiculous firewalls and obstructive bureaucrats. It is time for all of these to be scrapped and those who object to be ignored.

If they are not, the next report in 10 years time will be even worse than the present one. And who knows? Perhaps we will have slipped from being 10 years behind to being 20! Is this what we want for our region and our future?

Khaleed Al-Maeena is the editor of the Arab News