SOCIAL AND ECONOMIC INTEGRATION AMONG COUNTRIES OF THE ARAB EAST

This study finds that the states of the Arab East can be divided into three types, for each of which traditional economic integration holds as much threat as promise. Oil-producing states of the Gulf and Peninsula typically pursue policies of exporting oil to the West in return for Western manufactured goods. The trade barriers of a customs union or common market would severely constrict such trade. Entrepot states--notably Lebanon and Bahrain--which have tied their economic existence to serving the relationship between oil producers and the West would find their economic interests similarly damaged. A third group of states more closely resembles the traditional developing nation pattern, and attempts to stimulate trade among them face problems common to other attempts to promote trade among states producing the same mix of products. In addition, deep political divisions exist among these latter states. Not surprisingly, attempts to stimulate trade among the region's states have failed. The argument has recently been advanced that movements of labor and money within the region indicate a "natural" integration among the region's "capital-rich/labor-poor" oil-producing states and its "capital-poor/labor-rich" non-oil-producers. This study finds the above argument largely invalid. Movements of labor and money have led to increased interdependence among the region's economies, but not to greater integration among them. It is argued here that movements of labor and money in the region are not movements of factors of production, as they are often called, but are means of redistribution of oil revenues among the region's states. An Arab oil economy has developed--a system in which the political stability of both oil-producing and non-oil-producing states depends on the redistribution of oil wealth--but not an Arab economy as is usually argued.