The control and direction of
economic development is one of the most critical problems facing leaders
in the Arab world. The complexity of the decisions associated with
economic development and the concomitant social changes brought about by
economic development have increased with the growth and development of
modern technology. As in the past the key to economic development rests
in four basic factors: "population, natural resources, capital
formation, and technology."1
In
the Middle East the interplay of the four basic factors of economic
development has generated a considerable amount of consternation among
not only Arab leaders but also international observers because
technology has become the dominant factor in economic development.
Increasingly, the Arabs find it to their interest to do what they can to
encourage the transfer of foreign technology and managerial talents to
their part of the world. The Arab leaders of today are also fully
cognizant of many of the pitfalls of rapid economic development
facilitated by the transfer of foreign, to a large extent Western,
technology and managerial talents to the Arab world. Indeed,
"Prophets of gloom," says Rene Dubos in his book
So Human an Animal, "now predict that mankind is on a course of
self-destruction, or that, in the unlikely event of its survival, it
will progressively abandon the values and amenities of Western
civilization."2
The goal then, of Arab
leaders, is to modernize their societies without completely destroying
their own culture.
The theory that economics plays an important part in the transformation
of social institutions has been well established. The hypothesis that
technology acts as a significant catalytic agent in the transformation
of social institutions has only recently been truly appreciated by
scholars. In The Great Transformation by Karl Polanyi one of the major
themes deals with the effects economic development has had on social and
political institutions. Today the Arab world leaders both public and
private are faced with the situation of not only continued economic
change but also a rate of change that has been greatly accelerated by
modern technology. "The search for the mastery of nature and for
unlimited growth," writes Dubos, "generates a highly
stimulating, almost intoxicating atmosphere, where the very hint of
approaching stabilization creates apathy."3
Certainly nobody would assert that the Arab leaders have any special
trait that will exempt them from the manifold pressures of rapid
economic development. It is in that same intoxicating atmosphere that
Arab leaders, both in government and in the private sector, must be
willing to say:
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We cannot make
decisions just for partisan or monetary reasons, or for
short-term gain. These decisions must be great beyond our
lifetimes and not just for the moment.4 |
In short, Arab leaders must be
bold enough to face the challenge of change.
As the year 2000 approaches it
will become increasingly important to recognize and appreciate the fact
that mankind and its social institutions must keep pace with the ever
increasing rate of technological change. This task will be especially
difficult in nations, like those of the Arab world, that are
underdeveloped or in the "neotechnic"5
phase of development. In those Arab states just beginning to feel the
impact of technological change Paul A. Samuelson suggests that "one
of developments most pressing tasks is to hasten internal growth of the
scarce entrepreneurial and commercial spirit."6
A fundamental deficiency in the ability to
marshal the needed internal
drive and spirit necessary to proceed with rapid economic development
and cope with the concomitant social changes serves only to further
compound the problems the Arab world must face. William R. Polk seems to
second Samuelson's suggestion when he states:
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But development is
only in part a matter of economics. Capital is a necessary but
not sufficient cause for its achievement. Development must occur
in the minds of men or it does not occur at all. It is,
consequently, to be seen as a deeply psychological and
political, as well as, economic phenomenon. It has taken us long
years to come to understand this but still our understanding is
only rudimentary. We understand how to assemble the tinder but
not how to strike the spark. Indeed, it is doubtful that
outsiders can strike the spark.7 |
The gap between the state of
technology in the post-industrial nations and the state of technology in
the Arab world creates problems for the Arab nations at a rate that is
directly related to the size of the gap. In spite of the tremendous oil
revenues received by Arab oil producers, not the least of the problems
facing the Arab world is the problem of capital formation.
Paul Samuelson devotes an
entire chapter to the processes of development and his observations on
capital formation in underdeveloped countries are strikingly simple:
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Rates of productive
capital formation in underdeveloped countries are low because of
(a) poverty, (b) lack of a bourgeois ethic stressing frugality
and acquisitiveness, (c) qualitative distortion of saving outlets
towards unproductive hoarding of precious objects and idle
inventory and luxurious real estate or money markets abroad, (d)
emulation of consumption standards of advanced nations, and (e)
nationalistic barriers to importing capital on terms acceptable
to investors in the advanced countries.8 |
Note that all five reasons
sited by Samuelson imply some type of social institution relationship
that is directly related to the state of technology in the Arab world.
Here it is important to make a distinction between having capital and
capital formation. Even in the rich Arab oil producing nations, which
produce large reserves of capital, there is still a need for capital
formation at the middle and lower levels of the societies. Capital
formation is extremely important to underdeveloped countries, but
Samuelson asks his readers to remember that "the fingers and brains
of men in the underdeveloped countries are much like the fingers and
brains of their more prosperous brethren; but men in advanced nations
work with a plentiful supply of capital goods built over the
years."9
Again the undercurrent of
Samuelson's remarks indicates that it is the social response to
technology that determines how successful an underdeveloped country will
be at capital formation.
Foreign investments by highly
developed nations may or may not be desired by an Arab nation according
to its ability to perceive not only the purpose but also the
implications of outside investment. In the past some Arab nations, such
as Saudi Arabia, have been able to recognize the importance and
significance of developing their natural resources and have taken steps
that would induce advanced nations to invest considerable sums of
capital. While at present the Saudis do not really need foreign capital,
"they want it because it is a guarantee that the overseas companies
will work harder and stay interested."10
Other nations, in contrast, such as Egypt, have been unable, in the
past, to recognize the importance of legitimate foreign investment and
took steps that made foreign investment unattractive. "The approach
was based on the assumption that private economic activity was by its
very nature exploitative, inefficient, and distorting of the development
process."11
Polk continues by saying:
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The capitalist
received a privilege, whether land or an industrial concession,
was subsidized, and was protected from competition by the
government. Often, the capitalist was a foreigner and this
introduced an emotional factor of antipathy . . . The central
fact was that he did not justify, by creating new wealth, the
privilege he acquired. It was quite reasonable, therefore, that
in many of the Arab countries, he should be expropriated,
sequestered, or otherwise put out of business in the 1950's.12 |
The examples of Saudi Arabia
and Egypt also illustrate Samuelson's reminder that "foreign
investment will have to take into account the rising tide of
nationalism."13
Although important,
nationalism does not always play a key determining factor in rapid
economic development.
Nations in the Arab world are beginning to recognize that nationalism
alone is not the key factor in rapid development. In Iraq, for example,
both before and after the 1958 revolution, the Iraqi government
commissioned scores of millions of dollars for sophisticated plans on
virtually every aspect of its economy. The result was that only those
projects which could be commissioned and built by foreign firms were
effectively implemented. Further, even those commissioned and built by
foreign interests failed to produce a synergistic reaction in the
general Iraqi populace. Polk reports:
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Thus, little by
little, even the radical Arab governments have come to recognize
(as apparently has the Soviet Union), that development is a
process which requires participation and that participation,
while occasionally effectively brought about by ideological,
religious, or patriotic sentiments, is most efficiently,
effectively, and rapidly produced by self-interest. This lesson
has been particularly vivid in Egypt.14 |
So, the problem of the Arab
world being able to keep pace with technological development and at the
same time maintain a comfortable rate of social transformation is not
beyond the realm of resolution. That does not imply that the impact of
technology upon the social transformation process in the Arab world is
insignificant, but it does establish the fact that the problem of
technological impact is not so grave as to ward off any attempt at
economic development.
Technology as a social change factor becomes an important economic
parameter as an advanced nation or one of the oil-rich members of the
Arab world assesses the feasibility of committing capital to the
development of a foreign (Arab) resource. The nation or corporation (it
makes little difference which for the purpose of this discussion)
contemplating the prospect of an investment must consider not only the
political and social condition of the country but also the cost and
availability of labor and transportation. The level of technology is
directly related to the skill factor of the local population, as well
as, the type and availability of transportation.
Although slightly more complicated to compute, the cost of available
local labor and transportation are also related to the level of
technology. Labor expenditures and transportation costs are more
difficult to analyze in that a simple "have" or "have
not" equation cannot be applied. However, true labor costs can be
determined by computing the original market value of labor in the
selected country, which is a reflection of the level of technology, the
cost required to train an initial labor force, and the projected market
value of the new labor force. Similar computations would be required in
the computation of the true cost of transportation. The role of
technology as a social change factor, both before and after an
investment is made, is a key determining factor in the rate of
development. The assessment of the response a population will give to a
given set of technological innovations is therefore a prime indicator to
the total success factor of any development project in the Arab world.
Of course, each time the level of economic development is increased and
a new or more advanced set of technological innovations is introduced
the situation will change and a new success factor must be established.
It would seem appropriate to insert an example of how the above model
applies to development in the Arab world. For my purposes Saudi Arabia
proves to be an excellent example. In spite of its new found wealth
Saudi Arabia remains a backward feudal kingdom in many ways. Some of its
major cities are ringed by shantytowns. Its desert wastelands are broken
by few ground transportation links. Its major port, Jeddah, is so
backlogged that important supplies must be airlifted into country, and
those goods must then be unloaded amid scenes of mass confusion at
Jeddah Airport. As one high Saudi official concedes sadly, "We are
even ten years behind Kuwait."15
Saudi planners recognize that the only way they will be able to
accomplish their virtual overnight industrialization is by opening their
doors to foreign businessmen. The Saudis are determined to let
foreigners in only as partners with Saudis in joint ventures. The reason
for the keen interest in joint ventures is, as one Saudi official says,
"to insure that the other party is not just out for the fast
buck."16
Apparently this restriction
does not seem to dampen the enthusiasm of foreign investors.
Planning vast development projects is one thing; turning them into
reality is quite another. One unusual problem the Saudis face is
an absolute lack of population let alone a population of skilled
workers. The government has recently completed the Kingdom's first
census, and though the official count has not been released, most
businessmen believe the population will total around 4 million.17
Isham Nazer, UCLA-educated Saudi Planning Minister, openly admits,
"There is also an appalling lack of specialized skills."18
Saudi Arabia's technical elite today consists of about 2,500 men19
who have studied at universities abroad. As a result, the majority of
the people are poorly educated, and there is a backlog of development
proposals because there are not enough trained people to deal with them.
To remedy the situation the government has established an industrial
development fund, and it hopes to build vocational training institutes
with the help of U.S. and other advanced nations. "We have
set up the fund to give low-interest loans for business purposes and the
like," says Nazer, "But once a Saudi gets this help he has to
make it on his own."20
Isham Nazer's
remarks are consistent with the expressed views of the late King Faisal.
In a speech delivered at the dedication of one of the many public
projects being implemented all over Saudi Arabia His Majesty King Faisal
said:
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This country is in a
phase of its development which needs more emphasis on trades and
technical skills since the implementation and continuation of
projects require a working manpower which must be provided only
by the sons of our own country.21 |
In the process of teaching the
Saudi technical skills (technology) and putting him into a new
technology career a whole string of social changes will occur.
There is a need to impart the skills needed to effectively utilize
modern technology at all levels. As Polk observes:
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Everywhere in the
Arab countries, as in most of the Third World, there are
brilliant, highly skilled men at the top who compare favorably
with the best anywhere in the world. But they suffer from two
fatal defects: First, they are few in number and second, they
are virtually unsupported by second-echelon talent. The
society tends to resemble an army with a highly competent
general staff and no sergeants. To build a social and
intellectual system productive of skills is certainly the
challenge of the next generation in the Middle East.22 |
Surely, this attests to the
veracity of the need for continued and increased application of the
routines illustrated in the model for plotting the growth of
technological development and its impact as a social change factor in
the development of the Arab world.
The importance of using technology as a social change factor in the
evaluation of the Arab world's response to economic development
continues even as individual countries or groups of countries approach
the development of an industrial or perhaps even a post-industrial
state. This process occurs even among the most advanced nations.
The United States is one of the few post-industrial states in the world,
but we still speak of growth and development in the United States. In
his book The Children of Frankenstein: A Primer on Modern Technology and
Human Values Herbert Muller comments, "In our society exploding
appears to be a normal mode of expansion."23
The same mode of expansion may be felt and witnessed on the streets of
any major city in the Arab world.
While the total level of production and development reflects prosperity
there are numerous "isolated"24
areas in the Arab world that remain at a very low level of development,
even when compared to the take-off stage of development for the Arab
world. The existence of underdeveloped pockets in nations that are
otherwise making significant development progress has become an
important international issue. The mere presence of an underdeveloped
area in an otherwise developing country would tend to indicate that
technology spreads as a result of intentional development and not by
diffusion. Surely, one of the primary objectives of every Arab nation
that has underdeveloped pockets within its borders should be to
implement projects that would raise the economic level of those areas to
the same level as the rest of the nation. The situation can only get
worse if steps are not taken to develop the poorest communities in the
Arab world. As time goes on the cost factor will increase at the same
rate it would if the conditions existed anyplace else in the world.
The immediate problems of development are not the only technology
related problems facing the Arab world. The impact of technology as a
social change factor increases at a rate that is very similar to what
happens when a bellows is pressed together. If the number of folds per
unit distance is compared to the relative impact of increasing
technology and the rate at which the bellows is compressed is compared
to the rate of increasing technology, then it is easy to visualize that
the impact of technology increases at a rate that gives a society an
ever decreasing interval to respond to the change. For instance, in
Saudi Arabia planners are painfully aware that time is the major defense
against the effectiveness of the oil-weapon. "We have five to eight
years to lessen our dependence on oil and diversify our economy before
the world lessens its dependence on us." says Isham Nazer,
"There isn't a moment to be lost.25
The impact of technology as a social change factor can be measured
in many ways, but perhaps the final measure is in measuring the
stability of the governments in the Arab world. There are important
differences between building a state and building a nation. For one, the
building of a state is much easier than the building of a nation. The
state is essentially an administrative organization. A society is, on
the other hand, essentially a political order. Many of the Arab
governments which came into independence during the 1930's and 1940's
have tended to confuse the two and have tried to rely upon the state in
default of the society. Governments have not only been bureaucratized
away from popular participation but also the state has been abstracted
from politics. There is hope. In recent years governments have been
increasingly learning that issues for which political solutions are not
found cannot be permanently remedied through the use of military
suppression. As Polk succulently points out:
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Government is
ultimately dependent for its effectiveness and even survival
upon recognition of its legitimacy. And legitimacy is one of the
most fragile and least understood concepts in politics.
Acquired in various cultures through a "mandate of
heaven," through leadership of a widely recognized national
cause, or formalistically through an election, it cannot,
apparently, be imposed merely by force.26 |
Whatever the source of
legitimacy throughout the Arab world, it is apparent that the impact of
technology will be substantial. Thus, the success with which Arab
leaders are able to handle the tremendous social changes brought about
through the introduction of modern technology into traditional Arab
culture will to a great extent be a measure of the success with which
those same leaders will be able to maintain the legitimacy of their
governments. With maintenance of legitimacy within the individual Arab
governments comes stability. And the stability of the entire world is
dependent upon some semblance of stability in the Arab world. That makes
technology as a social change factor a pretty important concept to
understand.
F O O T N O T E S
1Paul
A. Samuelson, Economics: An Introductory Analysis, sixth ed. (New
York: McGraw-Hill Book Company, 1964),p. 773.
2Rene
Dubos, So Human An Animal (New York: Charles Scribner's Sons, 1968),
p. 9.
3Ibid.,
p. 7.
4Walter
J. Hickel, Who Owns America? (New York: Paperback Library Edition,
1972), p. 278.
5Herbert
J. Muller, The Children of Frankenstein: A Primer on Modern
Technology and Human Values (Bloomington: Indiana University Press,
1970), p. 67.
6Samuelson,
Economics, p. 774.
7William
R. Polk, The United States and the Arab World, 3d. ed. (Cambridge:
Harvard University Press, 1975), p. 438.
8Samuelson,
Economics, p. 773.
9Ibid.,
p. 768.
10________,
"Saudi
Arabia: The New Breed of Empire Builders," Business Week
(December 7, 1974), p. 42.
11Polk,
Arab World, p. 438.
12Ibid.,
p. 439.
13Samuelson,
Economics, p. 770.
14Polk,
Arab World, p. 440.
15Arnaud
DeBorchgrave, "Saudi Arabia Plays Catch-up," Newsweek
(October 28, 1974), p. 39.
16Ibid.,
p. 40.
17________,
"Saudi
Arabia: A Cautious Spending of Petrodollars," Business Week
(November 23, 1974), p. 52.
18DeBorchgrave,
"Catch-up," Newsweek, p. 40.
19 Ibid., p. 40.
20________,
"Petrodollars,"
Business Week, p. 52.
21________,
Saudi Arabian Mobility Program:
Operation Year Five: First Quarterly Progress Report (Riyadh: Saudi
Arabian Army Ordnance Corps, 1971), p. i.
22Polk,
Arab World, p. 441.
23Herbert
J. Muller, Children of Frankenstein, p. 87.
24"Isolated"
is used in context to mean both special and cultural isolation.
25DeBorchgrave,
"Catch-up, Newsweek, p. 39.
26Polk,
Arab World, p. 442.
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ISSAWI,
CHARLES and YEGANEH, MOHAMMED. The Economics of Middle East Oil. New
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NEIL H. Multinational Oil: A Study in Industrial Dynamics. New
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RICHARD R. Man's Place in the Dybosphere. Englewood Cliffs, N.J.:
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GEORGE A. Can Science Save Us?. second edition. New York: McKay Company,
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WILLIAM R. The United States and the Arab World. third edition.
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PAUL A. Economics: An Introductory Analysis. sixth edition. New
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November 23, 1974. pp.
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