Part 1. Libya, its neighbors and a bit of political economy: The role of the region in the international division of labor

2011/03/27

1. Place of the region countries in the international division of labor
Originally posted in Russian, Mar. 5th, 2011
Original source: http://comrade-vader.livejournal.com/23195.html

PDF version

Today and for a long, long time there is no such a country whose internal processes would be isolated from outer world. Systematic analysis of the situation requires to take in consideration all the forces which are involved. To crop the picture and to confine yourself to no more than country’s boundaries — it’s hypocrisy. With such croping you can easily overlook the whole octopus and leave in the field of vision only the tip of the tentacle, the strongest could appear as a weaker, and the one who is devouring and the one who is devoured may be swapped.

You can see in the Table 1 some important economic characteristics of countries in the region (Libya and its surroundings). The data are taken from the politically committed source (The CIA’s World Factbook) [1], from what our analysis will only gain, because it removes the possible accusations in pro-Gaddafi’s or other such bias.

Table 1. Economic characteristics of Libya and its surroundings

Indicators

Libya

Egypt

Sudan

Chad

Niger

Algeria

Tunisia

GDP (purchasing power parity), billion $

             

2010

89,03

500,90

98,79

18,59

10,58

254,70

100,30

2009

86,19

475,70

93,91

18,20

10,22

244,60

97,03

2008

86,77

454,80

90,12

18,49

10,35

239,40

94,22

GDP (official exchange rate), billion (2010 est.)

77,91

216,8

65,93

7,59

5,6

159

43,86

 GDP – real growth rate

             

2010

3,30%

5,30%

5,20%

2,00%

3,50%

4,10%

3,40%

2009

-0,70%

4,60%

4,20%

-1,60%

-1,20%

2,20%

3,00%

2008

2,70%

7,20%

6,60%

10,70%

9,30%

2,80%

4,60%

GDP – per capita (PPP), $

             

2010

13 800

6 200

2 200

1 800

700

7 400

9 500

2009

13 600

6 000

2 200

1 800

700

7 200

9 300

2008

14 000

5 900

2 200

1 800

700

7 100

9 100

GDP – composition by sector

             

agriculture

2,60%

13,50%

32,10%

50,50%

39,00%

8,30%

10,60%

industry

63,80%

37,90%

29,00%

7,00%

17,00%

61,50%

34,60%

services

33,60%

48,60%

38,90%

42,50%

44,00%

30,20%

54,80%

Labor force, million

1,729

26,100

11,920

4,293

4,688

9,877

3,860

Labor force – by occupation

       

(1995)

 

agriculture

17,00%

32,00% (2001)

80,00%

80,00%

90,00%

14,00%

18,30%

industry

23,00%

17,00%

7,00%

20,00%

6,00%

13,40%

31,90%

services

59,00%

51,00%

13,00%

 

4,00%

72,60%

49,80%

Unemployment rate

     

NA

NA

   

2010

9,70%

9,90%

14,00%

2009

9,40%

10,20%

13,30%

2008

30,00% (2004)

18,70% (2002)

Population below poverty line (~2003-2007)

NA

20,00%

40,00%

80,00%

63,00% (1993)

23,00%

3,80%

Investment (gross fixed), of GDP

13,20%

18,40%

20,20%

14,80%

27,50%

26,10%

Industries

petroleum, petrochemicals, aluminum, iron and steel, food processing, textiles, handicrafts, cement

textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures

oil, cotton ginning, textiles, cement, edible oils, sugar, soap distilling, shoes, petroleum refining, pharmaceuticals, armaments, automobile/light truck assembly

oil, cotton textiles, meatpacking, brewing, natron (sodium carbonate), soap, cigarettes, construction materials

uranium mining, cement, brick, soap, textiles, food processing, chemicals, slaughterhouses

petroleum, natural gas, light industries, mining, electrical, petrochemical, food processing

petroleum, mining (particularly phosphate and iron ore), tourism, textiles, footwear, agribusiness, beverages

Industrial production growth rate (2010)

2,70%

5,50%

3,50%

3,00%

5,10%

4,80%

1,60%

Exports, billion $

             

2010

44,89

25,34

9,78

3,04

52,66

16,11

2009

37,16

23,09

7,56

2,71

43,69

14,42

2008

       

0,43 (2006)

   

Exports — commodities

crude oil, refined petroleum products, natural gas, chemicals

crude oil and petroleum products, cotton, textiles, metal products, chemicals, processed food

oil and petroleum products; cotton, sesame, livestock, groundnuts, gum arabic, sugar

oil, cattle, cotton, gum arabic

uranium ore, livestock, cowpeas, onions

petroleum, natural gas, and petroleum products 97%

clothing, semi-finished goods and textiles, agricultural products, mechanical goods, phosphates and chemicals, hydrocarbons, electrical equipment

Exports — partners

Italy 37.65%, Germany 10.11%, France 8.44%, Spain 7.94%, Switzerland 5.93%, US 5.27% (2009)

US 7.95%, Italy 7.26%, Spain 6.78%, India 6.69%, Saudi Arabia 5.53%, Syria 5.3%, France 4.39%, South Korea 4.27% (2009)

China 58.29%, Japan 14.7%, Indonesia 8.83%, India 4.86% (2009)

US 90.06%, France 4.81%, China 1.6% (2009)

France 52.63%, Nigeria 22.43%, US 18.24% (2009)

US 23.2%, Italy 17.23%, Spain 10.83%, France 7.97%, Canada 7.65%, Netherlands 5.19%, Turkey 4.22% (2009)

France 29.6%, Italy 21%, Germany 8.8%, Libya 5.8%, Spain 5%, UK 4.8% (2009)

Imports, billion $

           

2010

24,47

46,52

8,48

2,63

37,07

20,02

2009

22,01

45,56

8,25

2,54

39,10

18,12

2008

       

0,80 (2006)

   

Imports — commodities

machinery, semi-finished goods, food, transport equipment, consumer products

machinery and equipment, foodstuffs, chemicals, wood products, fuels

foodstuffs, manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, wheat

machinery and transportation equipment, industrial goods, foodstuffs, textiles

foodstuffs, machinery, vehicles and parts, petroleum, cereals

capital goods, foodstuffs, consumer goods

textiles, machinery and equipment, hydrocarbons, chemicals, foodstuffs

Imports — partners

Italy 18.9%, China 10.54%, Turkey 9.92%, Germany 9.78%, France 5.63%, Tunisia 5.25%, South Korea 4.02% (2009)

US 9.92%, China 9.63%, Germany 6.98%, Italy 6.88%, Turkey 4.94% (2009)

 

China 21.87%, Saudi Arabia 7.22%, Egypt 6.1%, India 5.53%, UAE 5.3% (2009)

France 17.74%, Cameroon 12.7%, China 11.23%, US 7.59%, Italy 6.54%, Ukraine 5.33%, Netherlands 4.37% (2009)

China 16.32%, France 15.95%, Netherlands 7.66%, Algeria 7.15%, French Polynesia 6.11%, Nigeria 5.48%, Cote d’Ivoire 4.15%, US 4.05% (2009)

France 19.7%, China 11.72%, Italy 10.19%, Spain 8.13%, Germany 5.77%, Turkey 5.05% (2009)

France 20.1%, Italy 16.4%, Germany 8.8%, China 5%, Spain 4.5%, US 4% (2009)

Public debt

3.3% of GDP (2010 est.)

3.9% of GDP (2009 est.)

80.5% of GDP (2010 est.)

80.9% of GDP (2009 est.)

94.2% of GDP (2010 est.)

105.1% of GDP (2009 est.)

25.7% of GDP (2010 est.)

20% of GDP (2009 est.)

49.5% of GDP (2010 est.)

47.1% of GDP (2009 est.)

Debt – external, billion $

$6.378 billion (31 December 2010 est.)

$5.891 billion (31 December 2009 est.)

$30.61 billion (31 December 2010 est.)

$29.66 billion (31 December 2009 est.)

$37.98 billion (31 December 2010 est.)

$35.71 billion (31 December 2009 est.)

$NA (31 December 2010 est.)

$1.749 billion (31 December 2008 est.)

$2.1 billion (2003 est.)

$4.138 billion (31 December 2010 est.)

$5.413 billion (31 December 2009 est.)

$18.76 billion (31 December 2010 est.)

$19.6 billion (31 December 2009 est.)

External debt, % (calculated as the external debt for last year to GDP at official exchange rate for last year ratio)

8,19%

14,12%

57,61%

23,04%

37,48%

2,60%

42,77%

Stock of direct foreign investment – at home, billion $

$18.64 billion (31 December 2010 est.)

country comparison to the world: 70

$15.56 billion (31 December 2009 est.)

$72.41 billion (31 December 2010 est.)

$66.71 billion (31 December 2009 est.)

$NA (31 December 2010)

$4.5 billion (2006 est.)

$19.34 billion (31 December 2010 est.)

$17.34 billion (31 December 2009 est.)

$33.56 billion (31 December 2010 est.)

$31.86 billion (31 December 2009 est.)

Stock of direct foreign investment – abroad, billion $

$15.32 billion (31 December 2010 est.)

country comparison to the world: 49

$13.92 billion (31 December 2009 est.)

$4.9 billion (31 December 2010 est.)

$4.272 billion (31 December 2009 est.)

NA

$1.844 billion (31 December 2010 est.)

$1.644 billion (31 December 2009 est.)

$251 million (31 December 2010 est.)

$233 million (31 December 2009 est.)

[If the table is displayed incorrectly, please, see the PDF version.]

What conclusions can be drawn from these data?
Data on exports, imports, direct investment, and GDP estimates suggest that all these countries:
a) to a considerable degree involved in the international division of labor;
b) almost all focused on the U.S. or EU countries (except Sudan, which focused on China, India and Arab countries);
c) serve as raw material appendages;
d) to a greater or lesser extent, serve as a provider of labor (those countries where the real production are concentrated, and surplus value is created; in other words we can say that it is the workers of these countries bear the brunt in the international system of exploitation).

Paragraphs (a-c), I think, are obvious: (a) follows from a significant amount of foreign trade transactions, (b) — from the structure of exports and imports by trading partners, and (c) — from the structure of exports and imports by product categories.

On part (d) we should give more details. Pay attention to the Stock of direct foreign investment (at home / abroad). This is nothing but a flow of capital in pursuit of greater profit margins. This is one of the forms of capital outflow, the phenomenon which Lenin was singled out as one of the hallmarks of imperialism. Excess of inward (at home) investments over outgoing (abroad) ones characterizes the country as a country, where a real value are created, «worker-country». Also, such countries are known as debtor-states. If situation are the opposite — the country exports capital — then the country can be described as a capitalist-country, or also known as lender-state or rentier-state.

We see (from table 1), if data are presented, that for all countries, except Libya, the invard values exceed outgoing ones by orders of magnitude. On Sudan, Chad and Niger data are absent. Those are deep agrarian countries, what you can see from the structure of GDP and employment structure. By coincidence, those are countries which initially focused on the capitalist camp. Only Sudan stand a bit apart of the rest of them. In the country was a small roll in the direction of socialism in the early 1970’s. Sudan has trade relations with China, India and others countries in Asia and in the Arab world. Today, the economic relations between the West and Sudan are severed. President Omar Hassan Ahmad al-Bashir has issued an international arrest warrant (I wander, is there a crime in which he wasn’t accused by the International Criminal Court (ICC) in The Hague). Americans are quoting him as the worst dictator of our time, and don’t give dough to him anymore. Chinese, Indians and Japanese, meanwhile, do not disdain to. Those countries where there has been considerable foreign investments — such as Egypt, Algeria, Tunisia and Libya — are the industrialized countries. So we see interesting regularity: there is a distinct correlation between higher levels of economic development and quality of life — and the historical experience of transition to socialist, and depth of the process. States of the region, which started in the bourgeois relations from the socialist positions, today “mysteriously” are more advanced and have higher social wellbeing. With regard to Libya, then, as opposed to other industrialized countries in the region, the gap between the incoming and outgoing flows of direct investments here is not so significant (18.64 bln to USD 15.32 bln dollars; for other countries, once again, the difference is by orders of magnitude). This may indicate either that there is some transit of financial flows through Libya (as far as I know there is no any offshore territory in Libya), or that the Libya extracts higher rents than neighbors out of the sale of resources to Western countries, and has the ability to reinvest these earnings (there have been numerous reports on the involvement of Libyan capital in different European companies, including the highly profitable ones). It also means that Western partners are squeezed out of today’s Libya much smaller portion of the surplus value than they could have and would like to squeeze.

Some leftists, who «for order» (conservators), were put forward as the argument the idea that, allegedly, countries in the region is not formed their working classes, and therefore there is no real power which would be able to implement progressive changes, even if there really is a revolutionary situation (often in support of this somebody says that the Muslim Arabs of those places are in every way bend-handed (goof-up) and can not work, or even «deeper» observations, like: «I once visited the beach in Egypt, they all there were black-and-lousy,-not-like-we-whitemenanddescendantsofgreatforefathers andIhatethemall, theydoesn’tknowhowtoworkproperly!»).

Amount of foreign direct investments in those industrial countries in the region disproves such insinuations. Here, for illustration, compare the volume of these investments:
Libya — U.S. $ 18.64 bln
Egypt — U.S. $ 72.41 bln
Algeria — U.S. $ 19.34 bln
Tunisia — U.S. $ 33.56 bln

with GDP (by exchange rate) of some familiar to you countries:
Latvia — U.S. $ 23.39 bln
Lithuania — U.S. $ 35.73 bln
Estonia — U.S. $ 18.8 bln
Moldova — U.S. $ 5.357 bln
Georgia — U.S. $ 11.23 bln
Serbia — U.S. $ 38.92 bln

That is, e.g., during the year in Egypt alone foreign capital reproduces 7-fold, at least (we don’t know the true rate of return on investment (ROI), we can only guess, see below), all of Georgia’s GDP. Note also that the volume of direct foreign investment in Libya and Algeria are much lower than in Tunisia and Egypt. This indicates the relative degree of integration of these countries in the international division of labor (and, resp., its dependence on their foreign partners).

Such levels of investments told us, firstly, that for the propulsion and the multiplication of such masses of capital are required the corresponding masses of workers. Capital flows is not a charity, it is not about modernization of the world, and other such complacent blah-blah, it’s a rush for profit (unfortunately compilers from CIA silent on the most interesting: ROI; the most important for capital indicator is hidden from prying eyes). Meanwhile the only source of value is labor. And there are proper masses of workers, see the structure of employment by sectors. And the industrial sector is most pronounced in Tunisia, Libya and Egypt, and employment structure is similar to the structure of employment in the following undoubtedly industrially developed countries: Belarus, Bulgaria, Chile, Colombia, Greece, Kazakhstan, Peru, Philippines, Poland, Portugal, Romania, Russia, South Africa Thailand, Turkey, Ukraine, Venezuela, Vietnam.
For comparison it can be noted that in prerevolutionary Russia the share of employment in the agricultural sector were estimated to be from 76.5% [2] to 80% [3], the share of employment in
the industry — by 11,6% [2] to 17% [3]. This is much closer to today’s Sudan than to other industrialized countries in the region, but the revolutionary potential of the Russian Empire is hardly rising any doubts. Secondly, such levels of investments prove us that workers of these countries are able to work properly (there are absolutely no grounds to doubt in the
practicality of capital), whatever it seemed to Russian tourist-hamster’ fancy in images of Egyptian waiters (apparently they work well, since every jerk-client, scraped up money for the weel long holidays in Egypt, can feel himself like he is indeed a white man and can rest a bit from the continuous residence in the knee-elbow position).

Thus, these worker-countries (the world’s workshops, and along with, the world’s massage parlours, if you wish) are exploited by capitalist-countries (financial capital centers) on a global scale exactly the same way as it does when the capitalist exploits worker at the microeconomic level. On the other hand, there are other mechanisms for spillover of revenue. One of them, e.g., is difference in rates of exchange (due to deviation from the real value of currency).

Excess of GDP by purchasing power parity over GDP at exchange rate characterizes the country as a dependent, exploited: the actual value produced in the country is higher than its price on the world market (due to an undervalued currency). To demonstrate this, let’s for convenience take imaginary economy restricted to a single commodity, let it be «nail», and let’s simplistically imagine that in our hypothetical country A «nail» costs 10 rubles. In country B — $ 1, the official exchange rate of $ 1 is 30 rubles. Then, for a capitalist-country B the same nail in country A does not cost $ 1, but only 1 / 3 dollars, and for the same dollar, what is price of nail in country B, capitalist from country B can now buy as many as 3 nail. Accordingly, ceteris paribus, a A country’s currency is undervalued 3-fold.
The inverse ratio characterizes the country as a beneficiary, exploiter: the actual value produced in the country is lower than its price on the world market (due to currency overvaluation, which is provided by financial and political means, there is a redistribution of value in favor of the country: on its overvalued money it can purchase more real values from countries with undervalued currencies; or a capitalist from the beneficiary-country can acquire or produce the product at dependent country’s prices, mark it with the attributes of his own brand and sell in fact the same product at a higher prices on the beneficiary-country’s market protected by barriers).
The degree of deviation of these two indices from each other indicates the degree of overflow of the value created by this country in favor of foreign trade partners (though at a certain level of economic power, this potential difference can be a field for maneuver, e.g., that is what easily penetrating through the barriers China actively uses, causing a fierce Western World’s bathert with its «artificially low» currency). The gap between GDP estimates presented in Table. 2.

Table 2. The gap in the estimates of GDP by purchasing power parity and by the official exchange rate

Indicators

Libya

Egypt

Sudan

Chad

Niger

Algeria

Tunisia

GDP (purchasing power parity), billion $ (2010 est.)

89,03

500,90

98,79

18,59

10,58

254,70

100,30

GDP (official exchange rate), billion $ (2010 est.)

77,91

216,8

65,93

7,59

5,6

159

43,86

Gap, billion $

11,12

284,1

32,86

11

4,98

95,7

56,44

The gap as % of GDP by the official exchange rate

14,3

131,04

49,84

144,93

88,93

60,19

128,68

As we see, the Libya’s gap is the least of all gaps for these countries with a large margin from the rest. This indicates that, although participating in the international division of labor, Libya is subject to international exploitation in the least degree. That is Libyan regime leaves a significant part of surplus value wrung from the workers at the disposal of the country (the absolute values of the gap can be regarded as a kind of surplus value at the international level, but relative — as the rate of surplus value). This, again, can not fail to disappoint Western partners. Look, let’s say (you can imagine a hypothetical example, when a
foreign capitalist’s investor makes / buys at local prices in a dependent country some product
— let it be «aluminum spoon» — and resells it to the metropolis under the fashion label «IKEYA» at metropolis prices): the percentage on the invested capital in Egypt will be at least 131% — Wow! This is very delicious! But in Libya the unfortunate capitalist with a unique spoon gets only some 14.3% — yes it is indeed a complete lack of Freedom’n’Democracy! Where are watching, dang, Clinton?!

Although out of all countries Libya is the most urbanized and demonstrates the highest degree of industrialization (possibly competing here only with Tunisia), the structures of economies of Egypt and Tunisia seem to be more diversified, as can be seen on the diversity of exports and on decline of growth rate during the last crisis (more deep decline of the indicator during the global financial crisis, up to negative values, could indicate a narrow export specialization, lesser stability (decrease in demand for some commodity groups are not compensated by other commodity groups) and a higher sensitivity of the economy to fluctuations in world markets). Significant contribution to the GDP of Egypt and Tunisia is making tourism (sales of recreational services to outside World, for what the region is ideal), so (the lion’s share of revenue from tourism-related services not included in the export) the volumes of their exports markedly inferior to the volumes of exports of Libya and Algeria, which focused more on the industrial component and do not have the opportunity to develop a tourism industry for obvious reasons (in Algeria, following the closure of socialist regime has started a bloody standoff with Islamic radicals, with their rhetoric of jihad against foreign enemies; Libya was subjected to international sanctions, the latest ban lasted from 1992 to 2004 and was finally withdrawn only in 2006, and the constant harassment / demonization through the Western media, which excluded the development of this industry).
It will be interesting to note that structure of exports of these countries (among industrial) generally coincides with the Russian one (leaving aside the civil and military products yet not finished remains of Soviet production, which in Russian exports is not the defining component, about 5%, and after such kooky as the refusal to supply Iran with weapons stipulated by the contract, or voting for an embargo against Libya and demanding payment for the undelivered weapons, I think fewer and fewer will be fools to communicate with Russia).
On the example of these countries we can see that politics is the continuation of the economy. Such countries as Egypt and Tunisia in full and without reservations are integrated into the vertical economic structure of the West (as a dependent worker-countries). In their policies they completely follow the West’s waterway. Therefore, both Ben Ali and Mubarak, as recent events have demonstrated, for the U.S., EU and their minions are «their sons of a bitch» not only in words but in deeds. Libya, which has a relatively independent economic policy, thereby reducing the level of exploitation and inflicting loss of profits of the West’s capitalists, is able to exercise independent character on the political scene too (see, e.g., Libya’s contacts with the countries of non-grata, the political war with some European countries, or controversial move Gaddafi at the UN General Assembly in 2009 [24; 25]). Hence it is always irritated attitude toward Gaddafi, even at the seemingly completely normalized relations (the Western media have never ceased to peck at him, presenting him as some perverted, abnormal and alien screw ball (Libyan freak), wich just has to be tolerated, «because he has a crude»). While the Sudanese regime is completely fallen out of Western economic schemes and, even worse, completely switched to the Eastern giants, and as result was generally removed from the list of business partners and was enqueued for destruction (just hands are busy yet).

Contents:

Part 1. Libya, its neighbors and a bit of political economy: The role of the region in the international division of labor. — https://comradevader.wordpress.com/2011/03/27/part-1-libya-its-neighbors-and-a-bit-of-political-economy-the-role-of-the-region-in-the-international-division-of-labor/
Part 2. Libya, its neighbors and a bit of political economy: Demography and Social Policy. — https://comradevader.wordpress.com/2011/03/27/part-2-libya-its-neighbors-and-a-bit-of-political-economy-demography-and-social-policy/
Part 3. Libya, its neighbors and a bit of political economy: Class analysis. — https://comradevader.wordpress.com/2011/03/27/part-3-libya-its-neighbors-and-a-bit-of-political-economy-class-analysis/
Part 4. Libya, its neighbors and a bit of political economy: The course of events and strategies. — https://comradevader.wordpress.com/2011/03/27/part-4-libya-its-neighbors-and-a-bit-of-political-economy-the-course-of-events-and-strategies/

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4 Responses to “Part 1. Libya, its neighbors and a bit of political economy: The role of the region in the international division of labor”

  1. […] and a bit of political economy: The role of the region in the international division of labor. — https://comradevader.wordpress.com/2011/03/27/part-1-libya-the-role-of-the-region-in-the-internationa… Part 2. Libya, its neighbors and a bit of political economy: Demography and Social Policy. — […]

  2. […] and a bit of political economy: The role of the region in the international division of labor. — https://comradevader.wordpress.com/2011/03/27/part-1-libya-its-neighbors-and-a-bit-of-political-econo… Part 2. Libya, its neighbors and a bit of political economy: Demography and Social Policy. — […]

  3. […] and a bit of political economy: The role of the region in the international division of labor. — https://comradevader.wordpress.com/2011/03/27/part-1-libya-its-neighbors-and-a-bit-of-political-econo… Part 2. Libya, its neighbors and a bit of political economy: Demography and Social Policy. — […]

  4. […] countries. We have a huge amount of evidences for that now. Please, don’t confuse the cases. https://comradevader.wordpress.com/2011/03/27/part-1-libya-its-neighbors-and-a-bit-of-political-econo… The freshest in culture. Featured on PopPressed If You Haven't Yet Seen "Win Win," You […]

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