China/Syria Fact of the Day

by on June 24, 2008 at 8:18 am in Economics | Permalink

I have been talking with GMU President Alan Merten, who is also in Kunming via Syria.  In Syria, Alan was surprised when he was asked to meet with President Bashar al-Assad.  Even more surprising, the President wanted to talk about entrepreneurship, GMU, and how Syria can benefit from better economics.

Later, talking with the Finance minister, Merten learned one of the key drivers of this new openness.  The Finance minister explained that he was meeting with a counterpart in the Chinese government.  "What can we do," the Syrian Finance minister asked, "to increase Chinese investment?"  "Well," the Chinese minister replied, "before we invest in Syria you most open your markets, cut your subsidies, and reduce regulation…"   

goodnessOfFit June 24, 2008 at 8:44 am

Those commie bastards!

Real Andrew June 24, 2008 at 10:40 am

GMU advises Syrian dictatorship! This will be bigger than Friedman and the boys from Chicago in South America!

(tongue planted firmly in cheek).

Chris June 24, 2008 at 12:06 pm

Why wouldn’t Bashar put on a charming front for Western academics?

James Hanley June 24, 2008 at 12:48 pm

I have recently returned from a 12 day trip to Syria. About 10 years ago the socialist Baathist regime liberalized the laws on business ownership. Today there are a vast number of private entrepreneurs running shops and other small businesses. Unfortunately, they are all small, as no one yet has the resources to develop larger firms. The government has shut down some of its money-losing businesses, but is afraid to shut down more right away because the closures have already created a substantial unemployment problem.

One of the more problematic restrictions still on the books is a limitation on foreign owenrship of businesses, as any business in Syria must be majority Syrian owned. This explains why the only American fastfood in Damascus, a city of millions, is a single KFC franchise.

But keep in mind that Bashar al-Assad, the son of former dictator Hafiz al-Assad, has been in office less than a decade, has already liberalized politically (as far as allowing greater freedom to speak), and lived for years in Britain, where he–we can hope–became familiar with the western liberal political and economic traditions.

Also, Syria’s government has cut its mandatory military service from 2 1/2 years to 1 1/2, and does not seriously train its troops–they are shifting away from militarism and toward openness. If they do not get cold feet, they could be a success story over the next few decades.

happyjuggler0 June 24, 2008 at 3:38 pm

Why did the powers that be in Syria essentially help boliterate the previously healthy Lebanon? So as to invade it and stabilize it.

Why did Syria want to invade Lebanon? One possible reason is that the elder Assad was simply power mad and thought this would give him power. Another reason however is that they thought this would make them rich.

Once upon a time in world history, not that long ago actually, it was “understood” (amongst some anyway) that the best path to riches for a country was to invade a country that already had riches.

Invading, and occupying, Lebanon didn’t make Syria any richer though. It also brought them some serious pressure though to get out of Lebanon, perhaps on the order of a threat “heads will roll” (semi-literally) of the powers that be in Syria.

So how does one become rich when invasion doesn’t bring riches, especially when invasion is no longer a serious option? Find a country, or countries, that have succeeded spectacularly, and ask them how they did it. Especially if the country in question has a power structure that is analogous to one’s own.

I’ve long felt that a regional country that successfully improved its economy has a huge indirect impact on its neighbors. “Hey PM _____, why is the US/Chile/Ireland/Estonia/HK/Simgapore/Japan/Botswana so rich while we aren’t? Let’s be like them, albeit with changes that fit our way of local norms!”. And thus their neighbors change their policies to make common sense reforms, at least it is common sense when they are your neighbors.

China has graduated into this club of countries others want to emulate. There is no doubt in my mind that fear of traditional rival/enemy China has been a significant impetus for India’s reforms in the post-USSR period, in addition of course to those socialist republics effectively proving that socialism doesn’t work.

China is having an effect far beyond its geographical neighborhood though, it is also having an effect on its “political neighborhood” of fellow dictatorships which want to become rich and also stay in power without democratizing. Hence North Korea’s leader taking a tour of Singapore and China a year or so ago.

PJ June 24, 2008 at 5:09 pm

Maybe the next Milton Friedman Institute should be in Beijing.

M. Hodak June 25, 2008 at 6:00 am

GMU is doing God’s work. You’re little words of advice, with your institution’s reputation, even if it has only a marginal effect on Syrian thinking, will do more for peace and prosperity in the world than a year’s worth of papers and blog posts and ruminations on Mexican folk art.

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