Processes of deindustrialization have set the course for postmodernity. Though its impact varies with geography, it is deindustrialization which defines the conditions of social, political, and economic life across most the world today. This is certainly so in the Middle East and North Africa (MENA). There, premature deindustrialization bequeaths legacies of grave and enduring salience. In the economic domain, effects are observable in the region’s struggles with job creation, productivity, growth, and macrostability. Socially, they are present in MENA’s extreme levels of inequality. Politically, deindustrialization contributes to democracy’s recurring failures to launch.
This report takes identifying the drivers behind deindustrialization in the MENA as its primary task. Based on months of desk research and an extensive exploration of the historical archive, we trace causality across time and beyond the borders of the region. Findings are many, prominently including the following:
(i) The early onsetting of deindustrialization in the MENA was provoked by the global economy’s drift into stagnation beginning in the late 1960s.
(ii) Due to global issues of overcapacity and falling profit rates, securing the investment needed to nurture competitive manufacturing sectors has been exceedingly difficult.
(iii) Though global dynamics did make opportunities for healthy industrializing scarce, they did not condemn MENA countries to the fates ultimately suffered. Political choices and policy errors also played a role in shaping the course of events. Critical in these regards were modalities of state-capital relations, inadequate policy design, and a series of contingencies derived from the management of natural resource endowments.
(iv) Neoliberalism’s resolution of capitalism’s profitability crisis harmed MENA’s industrial prospects significantly. The deepening of global value chains over the past forty years has been detrimental to capital accumulation. The enforcement of intellectual property claims has obstructed traditional pathways to industrial progress. Furthermore, competitive pressures have forced firms to adopt capital intensive forms of production, limiting industry’s capacity to absorb greater shares of MENA’s workforce.
(v) The corporate welfarism that many MENA governments have institutionalized in hopes of attracting foreign investment in recent decades is fundamentally misguided: The extension of non-conditional benefits to corporate actors serves only to minimize the social and developmental utility of a prospective investment.
Looking ahead, it is plain that deindustrialization will continue weighing heavily on the region’s outlook. For a better future to be realized, local policy officials and members of the international community alike will need reckon with the factors compelling deindustrialization. Materially, this requires rethinking the terms and incentives governing matters of production, trade, and investment.
This publication has been supported by the Rosa-Luxemburg-Stiftung. The positions expressed herein do not necessarily reflect the views of Rosa-Luxemburg-Stiftung.
