The Trade Politics of Middle Eastern Industrialization

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The essential difference between rich and poor nations (say the less-developed countries) is the percentage between the purchase price of an ounce of raw cocoa in West Africa and the selling price of a Hershey bar in New York (or, indeed, Accra). The poor nations get only the fluctuating price of the raw commodity, determined by outside buyers. The rich countries receive the value added by transporting, manufacturing and packaging the commodity into an end product, along with all the jobs and industry created - from shipbuilders and wax paper manufacturers to advertising agencies.

Poor nations naturally wish to produce the candy bar in West Africa, near the source of the raw material that makes it all possible. Developed countries say this doesn't make economic sense; they have invested huge amounts of capital in shipping lines and chocolate factories; they already have the necessary trained tasters and candy-wrapping work force, and can do the job better than the poor nations ever could. The Third World replies that the developed countries - grouped in the Organization for Economic Cooperation and Development (OECD) - control this whole industrialization/manufacturing process and that the LDCs must break into it if they are ever to gain higher living standards and some economic independence. At issue are all the concerns of industrial and trade politics: the transfer of technology and capital, surplus productive capacity in Western industries, access by LDCs to OECD markets, jobs, tariffs, protectionism, economic autarky or dependence, self-esteem, power.

Now, for the first time since the breakup of the old colonial empires and the reemergence of Japan as an industrial producer after World War II, a group of less-developed countries in the Middle East and North Africa are moving to break into this industrialization cycle. Their weapon is not chocolate but their huge resources of oil and natural gas. Rather than simply shipping crude oil to the West and Japan, they are attempting to move downstream to produce and export refined petroleum products and petrochemicals - the basis of items from synthetic fibers, fertilizers and plastics to rubber and pharmaceuticals. Gas is not only important as an energy source and chemical feedstock, but is also the basis for new methods of steel-making and aluminum and copper smelting.