Academic journal article Journal of International Affairs

External Capital and Political Liberalizations: A Typology of Middle Eastern Development in the 1980s and 1990s

Academic journal article Journal of International Affairs

External Capital and Political Liberalizations: A Typology of Middle Eastern Development in the 1980s and 1990s

Article excerpt

Recent scholarship has emphasized that issues of state and regime are critical determinants of the scope and timing of economic reforms in the developing world. This approach, by and large, attributes the success and failure of such reforms to the nature of the state and its elite. By contrast, in surveying reformist developments in the Middle East in the 1980s and 1990s, this article contends that state access to external capital has been critical in shaping the scope and timing of economic reforms of third world states. At the same time, the availability of external resources has played a crucial role in shaping Middle Eastern political liberalization. Throughout the region, many regimes have structured their political openings in ways that legitimate their economic development models. This article offers a resource-based typology of economic and political reforms in Middle Eastern countries in the 1980s and 1990s.

Current development literature focuses on the ability of a state elite to impose neo-liberal economic reforms on uncooperative or hostile social groups, to forge effective alliances with pro-reform private-sector groups and the international donor and creditor community and to gather economic intelligence and formulate a coherent reformist strategy.(1)

The availability of nonconditional finance and external capital is an alternative - albeit somewhat neglected - explanation for the failure of some Third World states to implement substantive economic reforms. Though such an approach has not been used to present a systematic appraisal of the reforms of Third World states, a few analysts have suggested that the availability of exogenous resources has played a critical role in current developments. For example, John Waterbury has argued that Egypt and Turkey had roughly comparable statist development projects in the 1960s and 1970s. Crippling foreign-exchange crises compelled Turkey to engage in sweeping neo-liberal reforms in the early 1980s. In contrast, Egypt averted such reforms, largely because its considerable exogenous resources (particularly oil revenues and foreign aid) enabled it to maintain its statist and populist projects in the 1980s.(2)

Likewise, Miles Kahler has noted that some states have relied on infusions of external capital to postpone and mitigate their implementation of economic reforms demanded by international donors and creditors. Often, he argues, "alternative sources of finance" enable Third World countries to avoid - or renege on - International Monetary Fund (IMF) or World Bank agreements:

The availability of nonconditional finance was a disincentive for

compliance with IFI [International Financial Institution] conditionality ....

By reducing the need for future conditional finance (or even the

expectation of such a need), financial windfalls, such as recurrent

commodity booms, no-questions-asked aid, or private credit reduce the

likelihood of continued cooperation with the IFIs. Typically, the

borrower will exploit the conditional lender, agreeing to policy

changes only to obtain a seal of approval that will increase its access

to other sources of finance.

Kahler argues that Bolivia in the late 1970s, and the Philippines in the late 1970s and 1980s, exemplified this process of backsliding on agreements with international agencies.(3) But as Waterbury suggests, the availability of unusually large amounts of exogenous resources may well enable a state to preserve a statist development model and to avoid substantive reforms altogether.(4)

Indeed, by building on Waterbury's notion, one can speak volumes about economic and political reforms in developing countries. The contention here is that Middle Eastern states lacking substantial exogenous resources (especially oil revenues and foreign aid) have experienced severe economic crises and accordingly have created neo-liberal parliamentary majorities. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.