Multinational corporations in the Arab world with particular reference to the contribution of industrial joint ventures to development in the Gulf region

Abstract

This thesis investigates the status and the role of Multinational Corporations in the Arab World. Its main hypothesis is that the Multinationals today represent a permanent feature as the major world-wide source of modern technology. As such, the Arab countries will continue relying, into the foreseeable future, upon technology produced, owned or controlled by these global firms.

The research finds that a century of increasing integration with the western industrialised countries, primarily shaped by the activities of the multinational corporations, has nevertheless left the Arab region less industrialised and more technologically and institutionally backward than many other parts of the world. The Arab Nation as a whole, in all its diversity of countries and regions, has failed to economically or industrially advance at the same rate as other newly industrialising regions. The lack of commitment to national and regional development needs in the Arab World on the part of most multinationals, is matched by an equal absence of any clear sense of purpose and dedication on the part of the Arab countries themselves.

Despite the proposition by some Arab professionals and elites that the Arab States must consider breaking with any development strategy that substantially relies on access to capital and technology provided by foreign multinationals, the research contends that, in view of the current underdeveloped state of indigenous technology in the Arab World, the contemplation of the option of "de-linking" from the multinationals is neither possible nor desirable. The fact is, that the Arab States, individually or as whole, are not as yet prepared for the challenges that such a go-it-alone development strategy would imply.

The research also finds that, as the multinational' behaviour is governed by diverse objectives, helping out the developing countries of the Arab World to build-up their technological base is not generally one of their distinctive goals. They have their own "growth" strategy while each of the individual Arab States has its own "development" policy. The objectives of each differ, as shown in this thesis, and are often incompatible. Yet, for a multinational corporation to secure profit, growth and security, it will need the goodwill of the Arab countries, while the latter, in order to start building their technological base, need the multinationals. Thus, objectively, they need each other and a fruitful cooperation between the two parties depends on the convergence of two strategies, which usually need to undergo many changes in order to accommodate each other's diverse interests.

This means that, what a foreign multinational can really offer depends on how much an Arab country, individually or in collaboration with other Arab countries, may actually be prepared or able to take. From the latter's viewpoint, the ability to take is dependent on the extent to which the Arab countries can cooperate effectively together. The recent trend in the region towards forging economic integration, in the form of regional groupings among neighbouring Arab countries, is widely heralded to be an essential step in the right direction. However, in view of the considerable variations in natural resource endowments which exist among the countries of the Arab World, it has been increasingly suggested by the Arab participants of our main survey, that inter-Arab multinational joint ventures constitute a highly desirable form of organising economic activity, and of accomplishing effective economic cooperation among the countries of the region.

Most importantly, the thesis demonstrates that there are many areas in which conventional economic theories are deficient in explaining multinationals' behaviour and impact on the Arab World. Deficiencies between theory and practice arc referred to throughout the work and discussed in particular detail in Chapters 4 and 12.

A major conclusion of this study is that, the Arab governments which once feared the multinationals are now actively interested in seeking to court and accommodate them more effectively to local development needs. There is increasing evidence that the Arab countries have learned to bargain with multinationals to make them better serve their specific objectives and interests. Through more contacts and interactions, previously contrasting positions have softened and a wave of pragmatic attitudes on both sides is emerging to promote greater recognition of the mutual interests involved.

It is the hope of the author of this thesis that his work will encourage even greater mutual understanding and cooperation between the Arab States and multinational partners in the future. Indeed it is only through such cooperation that joint efforts can be effectively used to promote beneficial development and growth for the future prosperity of the Arab Nation as a whole.