Economic De-Development: Regression in the Absence of Agency
What is happening?
In a so-called ‘post-colonial world,’ colonial dynamics remain at play, arguably inherent to the livelihood of the Western world order and global power dynamics. Such dynamics include the economic arrest of countries, primarily those less developed, to minimize and even regress their development. As defined by political economist and scholar, Sara Roy, economic de-development is “a process which undermines or weakens the ability of an economy to grow and expand by preventing it from accessing and utilizing critical inputs needed to promote internal growth beyond a specific structural level.”1 Countries suffering from economic de-development continuously deteriorate, regardless of any increases in economic output, and often face ongoing war and conflict that strip citizens of their political, economic, and social agency.
One prominent case of economic de-development in the region is that of Syria. The economic toll of the civil war of 2011, which is incessant today despite subsiding, is unprecedented, amounting to $1.2 trillion and diminishing economic activity across all sectors.2 The subsequent destruction of physical capital, prominently infrastructures, has been one of the most damaging aspects to the economy, and significantly exceeds the norm. The country’s GDP per capita shrank 55 percent by 2020,3 seeing a 63 percent decline in the first four years of the war alone, and continues to sharply regress today.4 The war overlooked “ten years of liberalization, reform, fiscal sustainability, and stabilized per capita economic growth.”5 Likewise, Sudan’s civil wars and series of progressing conflicts have exacerbated the deprecating economic conditions in the country. In South Sudan, this has been attributed to the decrease in oil production, on which it is largely dependent, reduced oil prices, and rising inflation.6 The area is rich in natural resources, varying from oil, gold, diamonds, and silver to water resources, luxury timber, and fertile land, but the inability to put them to use means that significant indigenous knowledge has been lost. The Sudanese agricultural sector is a primary source of livelihood and employment, yet its contribution to the country’s GDP was greater between 1990 and 1999 than in the two decades that followed, according to a report by The International Food Policy Research Institute.7
By the same token, Yemen, one of the poorest countries in the region which hosts the worst humanitarian crisis in the world, since the start of its civil war in 2014, is struggling against a devastated economy. Persistent fighting has driven widespread food insecurity, with an estimated 24.1 million people at risk of hunger and disease in 2023 as per the UN, as well as the collapse of vital infrastructure in the country.8 In 2022, a reform program was introduced by governing bodies to alleviate economic, financial, and monetary conditions, with support from Saudi Arabia through the Arab Monetary Fund, worth $1 billion.9 The reform aimed to minimize unemployment and poverty rates, and reinstate infrastructure to establish greater stability in Yemen within the following three years. Despite these attempts at improvement, however, exchange rates have deteriorated to historic lows, resulting in increased food prices and worsening poverty levels.10 Inflation and foreign currency shortages weigh on the decaying economy.
Meanwhile, The United Nations Conference on Trade and Development (UNCTAD) has reported that Gaza’s economy was “hollowed out” over time, experiencing “16 years of de-development and suppressed human potential and the right to development.”11 The Strip’s economy, notably separate from the Occupied Palestinian Territories (oPt), has been in a state of paralyzing collapse, witnessing growing unemployment, at a 45 percent probability for citizens, and increasing public and private debt, coupled with a diminishing fiscal space and foreign aid.12 Monetary support steeply reduced to three percent of the GDP in 2022, in stark contrast to 27 percent in 2008, on which eighty percent of citizens were reliant, given that two-thirds of the population lived in poverty. In 2022, real GDP was near its lowest since 1994, a drastic 11.7 percent below the 2019 rate, and shrinking by 37 percent since 2006.13
Why is it happening?
Cases of de-development exist for varying context-specific reasons, but they primarily fall under political instability, dependency development, and static political economies. The conditions are more often than not negatively exacerbated by external actors. The paralysis of opportunities due to a lack of stable governing bodies has contributed to de-development, as evident in the case of South Sudan. A lack of governance has led to the incapability of establishing a national private sector in the area, thereby restricting citizens from using natural resources to their benefit and importing products from neighboring countries.14 In Sudan, political officials have failed to put in place development strategies or governmental spending for the agricultural sector, which also lacks public investment. Similarly in Syria, conditions “force the government to undertake massive deficit spending.”15 Political fragility has caused economic uncertainty, therefore limiting the reception of both public and private investments, which in turn, decreases public capital in the country. In the same vein, Yemen’s war led to the fragmentation of governmental institutions, and the establishment of separate regulations along lines of control.16 Thus, the inflow of necessary services to the country is dismantled, worsening both economic and humanitarian crises.17 Having had no functioning central government for the past nine years, growth in Yemen’s future is heavily reliant on stable political and security fronts. As such, growing political instability and the absence of government institutions result in growing economic unease, the mismanagement of resources, prevention of foreign and domestic investment in key sectors, and a failure to incite growth or even halt de-development.
The severe lack of economic growth remains ever-present in these contexts, even that achieved through dependent development, where internal structural growth is oriented to the interests of the external economy to which a country is subordinate.18 Its conception originated in the dependency paradigm, which describes the relationship between wealthier and poorer countries globally,19 stemming from intrinsically colonial power structures. Growth in these contexts thereby becomes disarticulated, and is ultimately limited, creating dependent economies that further contribute to de-development. Gaza is a primary case study where both basic and dependent advancement is suppressed. Two indicators of de-development are evident in features of Gaza’s economy: “the erosion of its own internal economic base and its resulting dependency on Israel.”20 The enclave is stuck in a cycle, in which the Israeli government has restricted economic activity, with land, sea, and air closures, thereby increasing the Strip’s dependence on it. One important case is Israel’s arrest of land and natural resources, removing its ability to offer a source of income for citizens, given the displacement of producers from the means of production. This stagnates both agricultural and industrial sectors in the Strip. As such, Gaza’s relationship with Israel “exceed[s] the traditional parameters of dependency,” and its economy has been transformed into an “auxiliary of the state of Israel,” benefitting the latter and simultaneously destroying the former’s socioeconomic structures.21
While aid offers some relief for economic conditions, it has a significant impact on shifting political economies within the countries, imposing external actors’ roles in conflicts and advancing their geopolitical interests, arguably “an instrument that donor countries use to influence the politics of the recipient countries.”22 Former senior vice president and chief economist of the World Bank, Joseph Stiglitz, suggests that economic “solutions” by organizations like the IMF and World Bank have the “feel of the colonial ruler.”23 In Palestine, aid offers a critical role in mobilizing assistance in the oPt and Gaza, and is dominated by Western players including the US and the EU, who in turn largely influence the World Bank and the UN. However, the functioning of foreign aid is highly reflective of global power structures as they exist in the region; monopolizing foreign intervention and using it to ensure a political say in matters on the ground. Donors have, consciously or not, contributed to causing greater socio-political and economic disorientation, and therefore, foreign aid remains “intricately intertwined and embedded within the processes of colonization and fragmentation.”24 Additionally, in the context of foreign aid to Yemen, the World Bank noted that “one-off windfalls do not eliminate the need for structural reforms.”25 In recent years, humanitarian assistance has decreased significantly, with short-term responses rather than long-term support systems in a dire crisis.26 External assistance, therefore, is attributed to development dependency, leaving economies crippled without it, and unable to enact change internally with it. Aid is used heavily as “a foreign policy tool for power and influence,”27 rather than a starting point for countries’ reconstruction.
Moreover, climate change and destruction have aggravated efforts for economic recovery and pushed de-development to a greater extent in already powerless contexts. Syria has witnessed several natural disasters, vulnerable to floods, droughts, extreme temperatures, landslides, and storms.28 The 2023 Syria-Turkey earthquake alone caused a contraction in the national GDP by 2.2 percent, estimated at $3.62 billion.29 In Sudan, climate challenges, such as droughts, floods, and crop pests that impede agricultural output offer increasing risk,30 as is the case in Gaza.31 Identically, Yemen is one of the most vulnerable countries to climate change and climate-related impacts on the region, and is ill-prepared to mitigate subsequent effects on water resources, agriculture, food security, and health. Droughts and unparalleled rises in temperatures drive growing water scarcity, as evident in the increase of desertification and deforestation to 97 percent in 2022, in contrast to 90 percent in 2014.32 Also contributing to a narrowing agricultural sector, flooding has caused economic damage, and the loss of crops and lives. Climate patterns in the region have, as conveyed, inflamed economic de-development, and prevented an alleviation of conditions in these cases.
What is being done about it?
Several context-specific approaches to resolving economic de-development exist, based on political capabilities, resource availability, and the nature of governing bodies and their bilateral ties. In Syria, the Belt and Road initiative offers prospective funding, with China strengthening its cooperation to offer more agricultural imports and aid in the implementation of varying initiatives in the country, as of September 2023.33 At the same time, the UN Development Programme (UNDP) is working alongside Micro, Small, and Medium-sized Enterprises (MSMEs), which make up an estimated 95 percent of total enterprises in the country, to foster social development and economic recovery through boosting sustainable employment opportunities based on existing skillsets of citizens.34 Similarly in Yemen, macroeconomic institutions, such as the Central Bank and Ministry of Finance, are supported by organizations like the USAID Economic Recovery and Livelihoods Program to enhance entrepreneurial opportunities that utilize local resources and facilitate trade efforts, both of which aim to boost economic output and improve the population’s livelihood.35 Other recovery programs in place include the UN’s Strategic Framework for Syria between 2022 and 2024, which emphasizes infrastructure reconstruction and civilian livelihood,36 and Sudan’s Economic Impact and Reform (SEIR) Program initiated by the UK in 2020 and planned until 2025, which offers support for poverty reduction, debt relief, and achieving lower rates of inflation.37 However, like many others, these ‘solutions’ fall back into the cultivation of dependency economies in the region, and simply put, do not do enough.
It is important to note that inaction is largely propelled by colonial motives, who deem conflicts in the region, and its citizens, unimportant, and thereby do not act or garner sufficient global awareness to provoke legible rehabilitation. In crises unrelated to Western strategic interest, or those wished to be avoided in public opinion, media outlets tend to “avert their eyes [and] aid agencies get stingy,” and the “world’s worst humanitarian emergencies are largely being ignored by the Global North.”38 Compared to US aid to Ukraine, for example, Sudan’s has been “microscopic.”39 The UN World Food Program (WFP) reflected a lack of food assistance money for global crises, nodding to issues of donor fatigue for long-withstanding crises, adding that assistance to Ukraine “sucked the oxygen” out of the organization.40 At the end of November 2023, the WFP cut off its humanitarian aid to Yemen, officially citing inadequate funding.41 The war in Ukraine moved the global economy towards “slower growth and faster inflation,” the International Monetary Fund (IMF) reported, with consequences heavily evident in the Arab world.42 Significantly, the war in Ukraine further pushed “several MENA countries down the priority list for donor governments, international institutions, and global media,” and overall, intensified the impacts of preexisting challenges, such as food security, agriculture, and health.43
In sharp contrast, and despite the continuous subjection to war, Ukraine’s economy remains set to grow by 3.5 percent this year and anticipates a further increase in 2024, already beginning to recoil from its sharp decline by 29.1 percent last year.44 While its economy is largely reliant on foreign support similar to the countries aforementioned, aid is much greater in value and varies in type: military, financial, and humanitarian, equipping the government with both the tools and quantity to remain stable while putting in place programs for future advancement.45 Ukraine did not have to diminish the reforms it initiated in 2014,46 and does not have to defend its actions on a global scale, with Western media largely tipped in its favor, compared to the aforementioned regional cases. Clear consequences of the war in Ukraine, such as sanctions on Russia, have also been enacted by the EU, weakening the perpetrator.47 The moral, financial, and political double standards of the North have been highlighted to the Global South, based on their reactions to Gaza compared to Ukraine, in media, aid, or multilateral relations.48 As such, the question of what is being done to reverse economic de-development shifts to what is failing to be done. Imbalanced support for crises in the North, compared to the South, has enabled critical situations to only worsen. Deliberate inaction, or calculated, limited action, permits the elongation of crises; reducing the likelihood of political stability, deteriorating social conditions, and ultimately propelling economic de-development.
What is next?
Economic predictions for these countries remain highly uncertain but display a trend in their slump in the near and far future. Syria’s GDP per capita is expected to further decline by 3.2 percent in 2023, with finite crop production, considering high water scarcity and input costs.49 Growth prospects are slanted towards a backslide; recurring climate shocks remain a risk and an extension of the Ukraine war’s increase in commodity prices is expected, which is unfortunate for Syria as a food and energy importer. While inflation may decrease, it is steadily high nevertheless.50 Likewise, Yemen has seen a trend of economic contraction in the past few years, and its GDP is expected to reduce by 0.5 percent in 2023, with few imports and stagnant oil exports, which experience growing constraints, and sharp reductions in foreign aid.51 Like Syria, high inflation negatively contributes to the country’s private sector. Political conditions remain unstable, with a six-month truce from April to October failing to yield any results. In 2024, unpredictability holds reign, and “economic stability hinges on sustainable foreign currency inflows and political developments.”52 Meanwhile, the IMF reports that Sudan’s GDP will diminish by a staggering 18 percent in 2023.53 The country’s currency has lost half its value since April 2023, leaving limited prospects for reconstruction in the immediate future.54 Further, according to a joint report by the UNDP and the UN Economic and Social Commission for Western Asia (ESCWA), the fighting in Gaza that began in October 2023 has been predicted to cause a drop of 12.2 percent in its GDP, given that it persists until the end of December.55 As per the UNCTAD, the overall economic consequences for the Strip are “impossible to determine,” with the full destruction of the enclave, and economic recovery will most definitely not be immediate.56 Impacts of this scale have not been seen in conflicts in Syria, Ukraine, or previously in Gaza or the oPt.
To face the overwhelming difficulty of overcoming de-development, countries need to establish and implement long-term economic plans rather than concede to short-term pressure, albeit contingent on the strengthening and unification of political bodies. Academic suggestions to enhance economic growth encompass “improving governance and macroeconomic stability, […] provoking a legislative and legal environment that facilitates the work of the private sector,” and offers space for dynamic reform through institutional and political capacity-building.57 Recovery, in parallel, sits on bottom-up development but requires top-down action. MSMEs, for example, must continue to be enhanced to increase the agency of its population and reinstate social cohesion. Strengthening the private sector is vital for countries to begin redeveloping conditions with an internal grasp on its direction and clear goals set in place. It is imperative for policymakers to develop alternatives to reliance on aid and formulate clearer means for their citizens to build financial capital. Moreover, the instating of powerful political and institutional factors is needed in order to regulate the flow of foreign and local businesses while reconstructing cities.58 The establishment of new trade deals will govern economic relationships between countries, such as advancing free trade agreements to promote globalization and development in multiple sectors, as well as formulating multilateral ties to gain political standing in global arenas.
Crucially, a rights-based developmental path is necessary in the region, engaging international law and discourse to hold parties accountable for conditions in these contexts, and putting an end to the continuous harm being inflicted upon increasingly vulnerable communities. Development cooperation, as per UN agencies, is a system that holds external actors accountable to achieving their obligations to citizens who are working towards claiming the basics of livelihood, which they are entitled to in conflict-ridden countries. The right to development sits at the crux of this framework, through addressing civil, cultural, economic, political, and social rights.59 A rights-based approach allows governments the space to establish policy reform and programs that set the stage for a flourishing economy, with a focus on local and community-based output, improving social conditions as well. Centering the rights of citizens to and on their land, beyond war, conflict, occupation, and the balances of world order, is imperative for countries to not only reverse de-development but to thrive in their advancement.
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The statements made and views expressed are solely the responsibility of the author, and do not represent Fiker Institute.
