What have the 90s taught us? From
an economist’s perspective,
the last decade has introduced
some momentous changes in the way we
understand growth and value.
We have learned that countries perform
better with liberal economic, trade and
financial systems. Economies where services
account for a high proportion of the
national income also proved successful.
Technology became crucial to economic
success. Knowledge-based economies
based on communications systems saw the
proliferation of computing facilities and
widespread use of the internet.
So too, education systems, particularly
those stressing mathematics, physics,
computing systems, genetics and cultural
evolution, became important foundations.
Another rule for success in the 90s is that
economies must embrace rapid changes
in order to improve competitiveness and
face challenges. Finally, successful
economies depend on the rule of law, well-
developed and broadly recognized principles
of justice and a judiciary independent
of political influences.
In the 60s, economic growth in emerging
markets hinged on acquiring manufacturing
skills and higher prices for commodities.
But in the first decade of the third millennium, computer skills, financial services and
tourist attractions will count for more.
Good systems of education and preservation
of nature and culture could do much to
bridge the widening gap between developed
and developing countries.
The problem in Lebanon is that the government
seems to be unaware of the
changes that have shaken the global economy.
The new government, in power for
over a year, has been concentrating on
narrowing the budget deficit at any cost.
Not only did they get
to the end of 1999 without reaching that
goal, government
policy has contributed
to what is a
severe recession.
Anyone who disputes
that the economy is
shrinking is ignoring a
wealth of indicators.
Expenditures on
development projects targeted at about
$600 million for 1999 did not exceed
$100 million. Total imports, which cover
as much as 60% of consumption requirements
and 80% of investments, dropped
by 13% in 1999 after having dropped by
5.7% in 1998. Customs revenues, which
were projected to increase over 1998 figures
by 19%, increased by just 2.2% in
spite of increased tariffs. Cement production,
real estate transfers and licenses
for new construction were all lower than
in 1998 by 8 to 10%.
Allocations for training teachers to
implement the new programs approved
by parliament in 1998 for improving
skills and learning, particularly in computing,
mathematics and physics, were
abolished, thus delaying educational
reform by at least three years.
The urgent needs for administrative
reform were badly handled
while the implementation
of environmental projects was
neglected.
Also, moves towards privatization
have been delayed with
scant attention paid to the
required preparatory steps.
The proposed law for setting up a privatization
board composed of the prime
minister, the ministers of justice, finance
and economy as well as the minister of the
sector concerned is a blueprint for politicizing
the process. This is in stark contradiction
of what is required for efficiency
and continuity.
Due to a lack of anticipated funds from
privatization or outright disposal of marketable
assets such as Intra Investment
Company shares, public debt increased by at least $3 billion by the end of the year
to reach about
$21.5 billion.
Reducing this debt is
becoming harder
every day with further
delays of privatization
and the continued recession.
Funds available
from international
institutions such as the World Bank and
European Bank for administrative
reform and wider computerization are
under threat of being withdrawn because
of delays by the government in taking
appropriate steps. Loans for environmental
projects from France and Japan are
also to be withdrawn in the face of government
lethargy.
The banner carried by the new government
has been that of decency and efficiency.
Possibly public decency has been
served by the attitude of the national
president and prime minister – particularly
in respect of settling past dues to the private
sector and really pushing for the
implementation of the Taif Accord
requirements.
By contrast, economic, educational,
administrative and environmental policies
have been embedded in naive concepts
that were current in the 60s. The government
seems to have been looking back so
much that it has failed to see the changes
that are sweeping the world.
