Syria The Economy
Marble relief of a goblet and leaves from door
frame of a palace bath, ca. A.D. 727, Qasr al Hayr al Gharbi
SINCE SYRIA BECAME independent in 1946, the economy has
undergone widespread structural change. Although the presence of
the Allied Forces during World War II stimulated commerce by
providing markets for agriculture, textiles, and other locally
manufactured goods, Syria lacked both the infrastructure and
resources to promote economic prosperity. Agriculture controlled
the country's economy and determined the pace of industrial
expansion as large landowners channeled profits from agricultural
exports into agroindustrial and related urban enterprises.
Syria's predominantly rural population, working under land tenure
and sharecropping arrangements, derived few benefits from the
agriculturally induced economic growth of the 1950s. However,
Syria's union with Egypt (1958-61) and the rise of the Baath
Party as the major political force in the country in the 1960s,
transformed Syria's economic orientation and development
strategy.
By the mid-1960s, government-sponsored land reform and
nationalization of major industries and foreign investments had
confirmed the new socialist direction of Syria's economic policy.
As the state assumed greater control over economic decisionmaking by adopting centralized planning and strictly regulating
commercial transactions, Syria experienced a substantial loss of
skilled workers, administrators, and their capital. Despite the
political upheavals, which undermined the confidence of
landowners, merchants, and industrialists, the state successfully
implemented large-scale development projects to expand industry,
agriculture, and infrastructure.
During the 1970s, Syria achieved high rates of economic
growth. The dramatic rise of world oil prices from 1973 to 1974
led to increased production from domestic refineries. Moreover,
higher prices for agricultural and oil exports, as well as the
state's limited economic liberalization policy, encouraged
growth. Also, Syria's economic boom was furthered by increased
remittances from Syrians working in the oil-rich Arab states and
higher levels of Arab and other foreign aid. By the end of the
decade, the Syrian economy had shifted from its traditional
agrarian base to an economy dominated by the service, industrial,
and commercial sectors. Massive expenditures for development of
irrigation, electricity, water, road building projects, and the
expansion of health services and education to rural areas
contributed to prosperity. However, the economy remained
dependent on foreign aid and grants to finance the growing
deficits both in the budget and in trade. Syria, as a front-line
state in the Arab-Israeli conflict, was also vulnerable to the
vagaries of Middle East politics, relying on Arab aid transfers
and Soviet assistance to support mounting defense expenditures.
By the mid-1980s, the country's economic climate had shifted
from prosperity to austerity. Syria's economic boom collapsed as
a result of the rapid fall of world oil prices, lower export
revenues, drought affecting agricultural production, and falling
worker remittances. Also, Arab aid levels decreased because of
economic retrenchment in the oil-producing states and Syrian
support for Iran in the Iran-Iraq War. To restore the economy,
the government sharply reduced spending, cut back imports,
encouraged more private sector and foreign investment, and
launched an anticorruption campaign against smugglers and blackmarket money changers. However, massive defense outlays continued
to divert resources from productive investments.
By the late 1980s, spot shortages of basic commodities
occurred frequently and industry operated far below capacity
because of routine power outages. Foreign exchange reserves
plummeted, the trade deficit widened, and real gross domestic
product
(
GDP) (see Glossary) growth fell as economic difficulties
compounded. Although the government instituted limited reforms to
respond to the burgeoning crisis, Syria's pressing economic
problems required a radically restructured economic policy to
improve future economic performance.
Data as of April 1987
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