Economic reform in Syria

Dr. Nabil SOUKAR

Abstract

After the high annual growth rates of the 1970s, the Syrian economy began to suffer in mid 1980s from a suffocating crisis. The government carried out some reforms supported by the oil discovery (1984) and the economy began to recover during the first half of the 1990s. However it went into crisis again due to many structural problems. The crisis is still existent because the government reforms depended only on a deflation policy in managing the total demand and increasing commodities offer by shy incapable support to the private sector. Such measures were not enough to stimulate investment and improve production because they had focused, as the World Bank put it, on economic fixation and neglected structural adaptation.

This failure, on the other hand, happened because the reforms were slow, partial, not based on clear view and carried out without an effective participation of the civil society.

The lecturer diagnosed the Syrian economy internal problems as follows: unsustainable growth, high population growth rate,high level of unemployment and poverty, fragmentized private sector, protectionist policy in industry, impotent banking sector, corruption and brains and capitals emigration.

Externally, it is facing many challenges: globalization, partnership with Europe .. etc.

As for the private sector reforms, many points must be underlined:

- Individual ownership is an essential right

- Reforming industrial, commercial and financial regulations

- The right to establish private banks, industrial cities and other services

- Equal chance for everybody

- Creating investment funds to help it restructure its framework

The lecturer mentioned many important steps to be covered to achieve successful and comprehensive economic reforms:

- A comprehensive development plan with a clear view of future challenges

- The state and the market must complete each other not eliminate each other

- Reforming the banking sector and developing financial markets in general

- Better education as well as technical and vocational training

- Combating corruption which means to prevent people with fortune and authority from exploiting drawbacks resulting from the reform process

- Encouraging the participation of civil society agents in planning and executing the reforms

- Encouraging scientific research and technological development

- Improving the state administration performance and the way of decision making

Finally the reform process should benefit from international experiences (Asian Tigers, China .. etc.) coordinating efforts at the same time with Arab partners towards building an Arabic economic block. It should also reconsider the IMF and WB prescriptions which have taught us that policies of controlling inflation and deficit and opening the market to external competition may create balance in the economy but are not sufficient to achieve comprehensive growth together with social and political stability

Globalization risks should not, at any rate, be used as an excuse for slowing down the reform process. In other words, the traditional enmity towards the West and local specifity should not prevent us from dealing open-mindedly with outside world

Commentary by Dr. Mounir Al-Himesh:

Economic reform, supposed to remove deformation and be led by the state, must be accompanied by administrative reforms. There no ready prescriptions in this context and the reform process should be based on the current situations and the local specifity. What happened in Syria was that the official mechanisms and legal institutions were not given an effective role in the reforms, so there have been no state mechanisms of planning and the malformed market could not give the alternative.