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GOVT 331 Beblawi - The Rentier State in the Arab World

GOVT 331 Beblawi - The Rentier State in the Arab World -...

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I ALLOCATION VS. PRODUCTION STATES thus a transition in the nature of the state may occur with less political trauma. The point is, that since oil, which is the main economic foun - dation of the allocation state, is a depletable asset, allocation states are necessarily a passing phenomenon. But how fast in passing? As things stand today, they can all count on another five or six decades of good life. And that is a long time. CONCLUSION This chapter discussed the question of the economic foundations of the state in the Arab world and underlined the importance of factors that are traditionally recognised in literature - such as conditions for water supply - as well as other factors, such as conditions of oil production and more generally the increasing role of the state in economic life. Attention was focused on the sources of revenue of the state and a distinction was proposed between allocation and production states. Of course, economic conditions do not explain all aspects of the behaviour of a state and economic factors cannot be reduced to the simple dichotomy of allocation versus production state. This is one analytical tool that may be added to others in order to achieve a better under - standing of Arab realities. The proposed distinction might be relevant outside of the Arab world as well. Oil then ceases to be the primary factor: still, in many countries the state primarily depends on income from abroad rather than from its own citizens. While aid-giving is an important dimension of today's international relations and a necessary instrument to spread development, the fact that it may generate induced allocation states is possibly not suffi - ciently recognised. The growing importance of international realities is allowing an increasing number of power structures to become essentially independent of their natural domestic con - stituencies: whoever has power has access to foreign resources that effectively elevate him above most challenges from within. Most frequently, commentators underline the instability of the developing countries, but in many cases it is the stability of some obviously rotten and unpopular regimes that should surprise us. Stability may, in fact, mean political immobilism, which is seldom for the better: what is frozen is not necessarily peace,but conflict; not freedom, but oppression. 4 The Rentier State in the Arab World ~ Hazem Beblawi .. INTRODUCfION The concept of a rentier state has gained renewed interest with the advent of the oil era and the emergence of the new Arab oil - producing states. In a celebrated passage, Adam Smith distinguished between rent and other sources of income: wages and profit. 'Rent', says Smith, 'enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price; high or low rent is the effect of it' (Smith, 1960: 412). A rent, it is to be remembered, is not merely an income for landlords, but generally a reward for ownership of all natural resources. 'Mines, as well
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