The impoverishment trap


Poverty in Arab countries is the result of erroneous policies. Many of the solutions designed by Arab countries to improve living standards have proved to be ineffective. Creating job opportunities in the public and private sectors for citizens can in fact exasperate not decrease poverty because jobs offer fixed monthly income. In other words, a person who lives on a monthly fixed income will go nowhere in terms of improving his financial status and will spend his whole life waiting for an increase in salary or a bonus every now and then.

Superpowers work hard to make poverty rampant in developing countries. The best example is the United States, which does this openly through promoting certain economic policies in the name of globalization. Any country that wishes to become advanced should, according to US policies, privatize health, education, water and electricity services and cancel subsidy and trade restrictions, which protect the national industry, while the US and its partners from major industrial countries continue to provide subsidies to these sectors and impose restrictions.

The developing countries have implemented US policies. As a result, their debts hit $2.5 trillion whereas debt servicing reached $375 billion a year in 2004, a huge number which exceeds the amount of money Third World countries spend on health and education combined. This figure is more than 20 times the foreign aid paid yearly by advanced countries.

John Perkins, an international economic expert, worked with others promoting a number of economic theories in developing countries in order to help mega-corporations pillage the assets of these countries. Perkins himself admitted that the US made Ecuador go bankrupt – the poverty threshold increased from 50 percent to 70 percent while the unemployment rate rose from 15 percent to 70 percent. Also, public debt rose from $240 million to $16 billion.

Today, Ecuador allocates 50 percent of its budget to debt repayment. The country had no other option but to sell its forests to US oil companies. Perkins said Ecuador was drowned in debt intentionally so that US oil companies could take control of the Amazon forests, which have oil reserves similar to the ones in the Middle East. Of course, the goal of the United States was not to make us drown in debt but to regain the money it paid for our oil.

If we want to increase the living standards of people, we need to implement a strategy that encourages small- and medium-size industrial projects. Creating job opportunities for citizens will not solve the problem because a job offers an individual a fixed monthly income but does not increase it. Jobs cannot increase productivity; they can in fact be described as disguised unemployment. Encouraging citizens to start industrial projects can increase the growth of industry in a short time because these projects do not require a large amount of capital or a complicated technology.

Asian countries have developed and enhanced their industrial sector through small- and medium-size industrial projects, which have helped increase the sector’s growth. China, for example, achieved the highest growth percentage in 1993 at 13 percent, thanks to small projects that represent 60 percent of China’s economy and employed 75 percent of China’s workforce.

The growth of Japan’s industrial sector can be attributed also to these projects. In 1999, Japan established the Small and Medium Enterprise Agency to facilitate the work of such projects and provide the owners with any assistance they might need. Today, these projects account for 99.7 percent of all projects in Japan and employ 40 million workers or 82 percent of the total workforce. The projects also contribute 80 percent of Japan’s Gross Domestic Product.

Moreover, small- and medium-size projects helped South Korea catapult to the forefront of advanced industrial countries. The Korean government has focused on heavy industries and chemistry since the 1970s. However, neglecting light industries strangled the Korean economy to such an extent that the government had to provide numerous incentives to small-sized projects in light industry. Today, there are over three million small-sized projects, constituting 99.8 percent of the total number of projects, and employing 10.48 million workers or 87 percent of the total workforce. The projects also represent 99 percent of total manufacturing industry projects.

The question is: Do we suffer from systematic impoverishment as a result of Western policies, which try to strengthen the hegemony of Western countries in the region? Or is this the result of our failure to keep up with advanced countries in terms of development and economic growth? If the situation continues, we are the only ones who should be blamed for this impoverishment. We still have time to get out of the impoverishment trap and enhance the industrial sector with the help of the local workforce and without foreign interference.