Industry matters

Despite weaknesses in data collection and policymaking, there are still manufacturing successes to celebrate in Lebanon

|Greg Demarque|

Top Asian industrial producers like China, South Korea and Thailand consistently rack up over 30 percent of their gross domestic product (GDP) from the value added by their manufacturing industries. The contribution of manufacturing to the Lebanese economy in each of the past 10 years has, by the World Bank’s estimations, notoriously been below 10 percent of GDP. Nothing new there for 2014. But it would be a fallacy to think that Lebanon lacks industry or potential for industrial growth. And, as Executive’s coverage of the manufacturing industry shows, it would be an even graver blunder to think that industry doesn’t matter for Lebanon.

Would you have guessed that South Korea’s per capita GDP represented less than 50 percent of Ghana’s, just 50 years ago? When internationally renowned development economist, Korean born Ha-Joon Chang of Cambridge University, recounted the journey of his home country from backwardness to OECD stalwart in a very critical review of what he described as a myth of free trade propagated by rich countries, he emphasized two things: the problematic policies of multilateral development organizations with their self serving free trade ideology, and the importance of manufacturing. In his book “Bad Samaritans,” he pointed to Switzerland and Singapore as countries whose manufacturing industries provide a much larger contribution to their wealth than people generally think.

In the Lebanese case, the accurate measurement of manufacturing capacities and industrial outputs in 2014 is — given the absence of not only an economic census but also of a government that could undertake one — still a hypothesis, one is tempted to say. Longer term export data, for all the analytical details that they do not entail and for all the massive fluctuations that they do, nonetheless tells a story of how this country of an allegedly overwhelming services orientation has been able to expand its exports from less than $50 million per month in 1994 to generally above $300 million a month for a 46 month period between September 2009 and June 2013. In this context, and corroborating the idea that manufacturing is very much a central pillar of nations’ wealth today, industry represented everything before the dot in the 1.5 percent growth of Lebanon’s GDP in 2013 — with services accounting only for the decimal.

This notwithstanding, industry and obstacles in Lebanon are as close as manakish zaatar and khodra, and known detriments are annually recounted by many an industrialist and practically every minister of industry.

On the other hand, as Executive’s reports on industry show with equal consistency, there are new stories of manufacturing successes in diverse niches every year. From brewers and canners and industrial scale bakers in the food sector, to makers of pharmaceuticals, jewelry, steel products and industrial equipment, the mosaic of manufacturing in Lebanon is extremely complex when compared to other countries. That is good for competitiveness, and as Executive examined the use of advanced automation technologies in Lebanon in our research for the 2014 Facts and Forecasts, we found new examples of this complexity.

In macro terms, it is amazing how manufacturing is worth more — and represents greater potential — than is let on by our long standing weaknesses in data collection and policymaking for industry. The call for better data and improved policymaking remains valid as ever. But more than anything, stakeholders and experts concur that the issue for manufacturing is to not complain about all that is bad or missing and merely wait for solutions from some higher powers, whether they are local politicos or multilateral organizations. The issue is to take more initiative, push enterprise forward without regard to political, economic and financial resources, and make the most of the talents and virtues of industry that we have. 

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.