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Part 1. Libya, its neighbors and a bit of political economy: The

role of the region in the international division of labor
2011/03/27

1. Place of the region countries in the international division of labor

Originally posted in Russian, Mar. 5th, 2011
Original source: http://comrade-vader.livejournal.com/23195.html

Today and for a long, long time there is no such a country whose internal processes would be isolated from
outer world. Systematic analysis of the situation requires to take in consideration all the forces which are
involved. To crop the picture and to confine yourself to no more than country’s boundaries — it’s hypocrisy.
With such croping you can easily overlook the whole octopus and leave in the field of vision only the tip of
the tentacle, the strongest could appear as a weaker, and the one who is devouring and the one who is
devoured may be swapped.
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You can see in the Table 1 some important economic characteristics of countries in the region (Libya and its
surroundings). The data are taken from the politically committed source (The CIA’s World Factbook) [1],
from what our analysis will only gain, because it removes the possible accusations in pro-Gaddafi’s or other
such bias.

Table 1. Economic characteristics of Libya and its surroundings

Indicators Li bya Egypt Sudan Chad Ni ger Al geri a Tuni si a

GDP
(purchasing
power parity),
billion $

2010 89,03 500,90 98,79 18,59 10,58 254,70 100,30

2009 86,19 475,70 93,91 18,20 10,22 244,60 97,03

2008 86,77 454,80 90,12 18,49 10,35 239,40 94,22

GDP (official
exchange rate),
77,91 216,8 65,93 7,59 5,6 159 43,86
billion (2010
est.)

GDP – real
growth rate

2010 3,30% 5,30% 5,20% 2,00% 3,50% 4,10% 3,40%

2009 -0,70% 4,60% 4,20% -1,60% -1,20% 2,20% 3,00%

2008 2,70% 7,20% 6,60% 10,70% 9,30% 2,80% 4,60%

GDP – per
capita (PPP), $

2010 13 800 6 200 2 200 1 800 700 7 400 9 500

2009 13 600 6 000 2 200 1 800 700 7 200 9 300

2008 14 000 5 900 2 200 1 800 700 7 100 9 100

GDP –
composition by
sector

agriculture 2,60% 13,50% 32,10% 50,50% 39,00% 8,30% 10,60%

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industry 63,80% 37,90% 29,00% 7,00% 17,00% 61,50% 34,60%

services 33,60% 48,60% 38,90% 42,50% 44,00% 30,20% 54,80%

Labor force,
1,729 26,100 11,920 4,293 4,688 9,877 3,860
million

Labor force –
(1995)
by occupation

agriculture 17,00% 32,00% (2001) 80,00% 80,00% 90,00% 14,00% 18,30%

industry 23,00% 17,00% 7,00% 20,00% 6,00% 13,40% 31,90%

services 59,00% 51,00% 13,00% 4,00% 72,60% 49,80%

Unemployment
NA NA
rate

2010 — 9,70% — — — 9,90% 14,00%

2009 — 9,40% — — — 10,20% 13,30%

2008 30,00% (2004) — 18,70% (2002) — — — —

Population
below poverty
NA 20,00% 40,00% 80,00% 63,00% (1993) 23,00% 3,80%
line
(~2003-2007)

Investment
(gross fixed), 13,20% 18,40% 20,20% 14,80% — 27,50% 26,10%
of GDP

oil, cotton oil, cotton

textiles, food petroleum,
ginning, textiles, textiles, petroleum,
petroleum, processing, mining
cement, edible meatpacking, uranium mining, natural gas,
petrochemicals, tourism, (particularly
oils, sugar, soap brewing, cement, brick, light
aluminum, iron chemicals, phosphate and
distilling, shoes, natron soap, textiles, industries,
and steel, food pharmaceuticals, iron ore),
Industries petroleum (sodium food mining,
processing, hydrocarbons, tourism,
refining, carbonate), processing, electrical,
textiles, construction, textiles,
pharmaceuticals, soap, chemicals, petrochemical,
handicrafts, cement, metals, footwear,
armaments, cigarettes, slaughterhouses food
cement light agribusiness,
automobile/light construction processing
manufactures beverages
truck assembly materials

Industrial
production
2,70% 5,50% 3,50% 3,00% 5,10% 4,80% 1,60%
growth rate
(2010)
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Exports, billion
$

2010 44,89 25,34 9,78 3,04 — 52,66 16,11

2009 37,16 23,09 7,56 2,71 — 43,69 14,42

2008 0,43 (2006)

clothing,
semi-finished
goods and
textiles,
crude oil and oil and
crude oil, agricultural
petroleum petroleum
refined uranium ore, petroleum, products,
products, products; oil, cattle,
Exports — petroleum livestock, natural gas, and mechanical
cotton, textiles, cotton, sesame, cotton, gum
commodities products, cowpeas, petroleum goods,
metal products, livestock, arabic
natural gas, onions products 97% phosphates
chemicals, groundnuts, gum
chemicals and
processed food arabic, sugar
chemicals,
hydrocarbons,
electrical
equipment

US 7.95%, Italy
Italy 37.65%, US 23.2%, France
7.26%, Spain
Germany Italy 17.23%, 29.6%, Italy
6.78%, India China 58.29%,
10.11%, France US 90.06%, France 52.63%, Spain 10.83%, 21%,
6.69%, Saudi Japan 14.7%,
Exports — 8.44%, Spain France Nigeria 22.43%, France 7.97%, Germany
Arabia 5.53%, Indonesia 8.83%,
partners 7.94%, 4.81%, China US 18.24% Canada 7.65%, 8.8%, Libya
Syria 5.3%, India 4.86%
Switzerland 1.6% (2009) (2009) Netherlands 5.8%, Spain
France 4.39%, (2009)
5.93%, US 5.19%, T urkey 5%, UK 4.8%
South Korea
5.27% (2009) 4.22% (2009) (2009)
4.27% (2009)

Imports, billion
$

2010 24,47 46,52 8,48 2,63 — 37,07 20,02

2009 22,01 45,56 8,25 2,54 — 39,10 18,12

2008 0,80 (2006)

foodstuffs, machinery
machinery, textiles,
manufactured and foodstuffs,
semi-finished machinery and machinery
goods, refinery transportation machinery, capital goods,
goods, food, equipment, and
Imports — and transport equipment, vehicles and foodstuffs,
transport foodstuffs, equipment,
commodities equipment, industrial parts, consumer
equipment, chemicals, wood hydrocarbons,
medicines and goods, petroleum, goods
consumer products, fuels chemicals,
chemicals, foodstuffs, cereals
products foodstuffs
textiles, wheat textiles

Italy 18.9%, US 9.92%, China China 21.87%, France China 16.32%, France 19.7%, France
Imports —
China 10.54%, 9.63%, Germany Saudi Arabia 17.74%, France 15.95%, China 11.72%, 20.1%, Italy
partners
T urkey 9.92%, 6.98%, Italy 7.22%, Egypt Cameroon Netherlands Italy 10.19%, 16.4%,
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12.7%, China 7.66%, Algeria

Germany 11.23%, US 7.15%, French
Germany
9.78%, France 6.88%, T urkey 7.59%, Italy Polynesia Spain 8.13%,
6.1%, India 8.8%, China
5.63%, T unisia 4.94% (2009) 6.54%, 6.11%, Nigeria Germany
5.53%, UAE 5%, Spain
5.25%, South Ukraine 5.48%, Cote 5.77%, T urkey
5.3% (2009) 4.5%, US 4%
Korea 4.02% 5.33%, d’Ivoire 4.15%, 5.05% (2009)
(2009)
(2009) Netherlands US 4.05%
4.37% (2009) (2009)

3.3% of GDP 80.5% of GDP 94.2% of GDP 25.7% of GDP 49.5% of GDP
(2010 est.) (2010 est.) (2010 est.) (2010 est.) (2010 est.)
Public debt — —
3.9% of GDP 80.9% of GDP 105.1% of GDP 20% of GDP 47.1% of GDP
(2009 est.) (2009 est.) (2009 est.) (2009 est.) (2009 est.)

$18.76 billion
$NA (31
$6.378 billion $30.61 billion $37.98 billion $4.138 billion (31
December
(31 December (31 December (31 December (31 December December
2010 est.)
Debt – 2010 est.) 2010 est.) 2010 est.) 2010 est.) 2010 est.)
$2.1 billion
external, $1.749 billion (2003 est.)
billion $ $5.891 billion $29.66 billion $35.71 billion $5.413 billion $19.6 billion
(31
(31 December (31 December (31 December (31 December (31
December
2009 est.) 2009 est.) 2009 est.) 2009 est.) December
2008 est.)
2009 est.)

External debt,
% (calculated
as the external
debt for last
year to GDP at 8,19% 14,12% 57,61% 23,04% 37,48% 2,60% 42,77%
official
exchange rate
for last year
ratio)

$18.64 billion
(31 December $33.56 billion
2010 est.) $72.41 billion $19.34 billion (31
$NA (31
(31 December (31 December December
Stock of direct December
country 2010 est.) 2010 est.) 2010 est.)
foreign 2010)
comparison to — —
investment – at $66.71 billion $17.34 billion $31.86 billion
the world: 70 $4.5 billion
home, billion $ (31 December (31 December (31
(2006 est.)
$15.56 billion 2009 est.) 2009 est.) December
(31 December 2009 est.)
2009 est.)

$15.32 billion
(31 December $251 million
2010 est.) $4.9 billion (31 $1.844 billion (31
Stock of direct December 2010 (31 December December
foreign country est.) 2010 est.) 2010 est.)
investment – comparison to — NA —
abroad, billion the world: 49 $4.272 billion $1.644 billion $233 million
$ (31 December (31 December (31
$13.92 billion 2009 est.) 2009 est.) December
(31 December 2009 est.)
2009 est.)

What conclusions can be drawn from these data?

Data on exports, imports, direct investment, and GDP estimates suggest that all these countries:
a) to a considerable degree involved in the international division of labor;
b) almost all focused on the U.S. or EU countries (except Sudan, which focused on China, India and Arab
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countries);
c) serve as raw material appendages;
d) to a greater or lesser extent, serve as a provider of labor (those countries where the real production are
concentrated, and surplus value is created; in other words we can say that it is the workers of these
countries bear the brunt in the international system of exploitation).

Paragraphs (a-c), I think, are obvious: (a) follows from a significant amount of foreign trade transactions, (b)
— from the structure of exports and imports by trading partners, and (c) — from the structure of exports
and imports by product categories.

On part (d) we should give more details. Pay attention to the Stock of direct foreign investment (at home /
abroad). This is nothing but a flow of capital in pursuit of greater profit margins. This is one of the forms of
capital outflow, the phenomenon which Lenin was singled out as one of the hallmarks of imperialism. Excess
of inward (at home) investments over outgoing (abroad) ones characterizes the country as a country, where
a real value are created, «worker-country». Also, such countries are known as debtor-states. If situation are
the opposite — the country exports capital — then the country can be described as a capitalist-country, or
also known as lender-state or rentier-state.

We see (from table 1), if data are presented, that for all countries, except Libya, the invard values exceed
outgoing ones by orders of magnitude. On Sudan, Chad and Niger data are absent. Those are deep agrarian
countries, what you can see from the structure of GDP and employment structure. By coincidence, those are
countries which initially focused on the capitalist camp. Only Sudan stand a bit apart of the rest of them. In
the country was a small roll in the direction of socialism in the early 1970′s. Sudan has trade relations with
China, India and others countries in Asia and in the Arab world. Today, the economic relations between the
West and Sudan are severed. President Omar Hassan Ahmad al-Bashir has issued an international arrest
warrant (I wander, is there a crime in which he wasn’t accused by the International Criminal Court (ICC) in
The Hague). Americans are quoting him as the worst dictator of our time, and don’t give dough to him
anymore. Chinese, Indians and Japanese, meanwhile, do not disdain to. Those countries where there has
been considerable foreign investments — such as Egypt, Algeria, Tunisia and Libya — are the industrialized
countries. So we see interesting regularity: there is a distinct correlation between higher levels of economic
development and quality of life — and the historical experience of transition to socialist, and depth of the
process. States of the region, which started in the bourgeois relations from the socialist positions, today
“mysteriously” are more advanced and have higher social wellbeing. With regard to Libya, then, as opposed
to other industrialized countries in the region, the gap between the incoming and outgoing flows of direct
investments here is not so significant (18.64 bln to USD 15.32 bln dollars; for other countries, once again,
the difference is by orders of magnitude). This may indicate either that there is some transit of financial
flows through Libya (as far as I know there is no any offshore territory in Libya), or that the Libya extracts
higher rents than neighbors out of the sale of resources to Western countries, and has the ability to reinvest
these earnings (there have been numerous reports on the involvement of Libyan capital in different
European companies, including the highly profitable ones). It also means that Western partners are
squeezed out of today’s Libya much smaller portion of the surplus value than they could have and
would like to squeeze.

Some leftists, who «for order» (conservators), were put forward as the argument the idea that, allegedly,
countries in the region is not formed their working classes, and therefore there is no real power which
would be able to implement progressive changes, even if there really is a revolutionary situation (often in
support of this somebody says that the Muslim Arabs of those places are in every way bend-handed (goof-up)
and can not work, or even «deeper» observations, like: «I once visited the beach in Egypt, they all there were
black-and-lousy,-not-like-we-whitemenanddescendantsofgreatforefathers andIhatethemall,
theydoesn’tknowhowtoworkproperly!»).

Amount of foreign direct investments in those industrial countries in the region disproves such insinuations.
Here, for illustration, compare the volume of these investments:
Libya — U.S. $ 18.64 bln
Egypt — U.S. $ 72.41 bln
Algeria — U.S. $ 19.34 bln
Tunisia — U.S. $ 33.56 bln

with GDP (by exchange rate) of some familiar to you countries:

Latvia — U.S. $ 23.39 bln
Lithuania — U.S. $ 35.73 bln
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Estonia — U.S. $ 18.8 bln

Moldova — U.S. $ 5.357 bln
Georgia — U.S. $ 11.23 bln
Serbia — U.S. $ 38.92 bln

That is, e.g., during the year in Egypt alone foreign capital reproduces 7-fold, at least (we don’t know the
true rate of return on investment (ROI), we can only guess, see below), all of Georgia’s GDP. Note also that
the volume of direct foreign investment in Libya and Algeria are much lower than in Tunisia and Egypt. This
indicates the relative degree of integration of these countries in the international division of labor (and,
resp., its dependence on their foreign partners).

Such levels of investments told us, firstly, that for the propulsion and the multiplication of such masses of
capital are required the corresponding masses of workers. Capital flows is not a charity, it is not about
modernization of the world, and other such complacent blah-blah, it’s a rush for profit (unfortunately
compilers from CIA silent on the most interesting: ROI; the most important for capital indicator is hidden
from prying eyes). Meanwhile the only source of value is labor. And there are proper masses of workers, see
the structure of employment by sectors. And the industrial sector is most pronounced in Tunisia, Libya and
Egypt, and employment structure is similar to the structure of employment in the following undoubtedly
industrially developed countries: Belarus, Bulgaria, Chile, Colombia, Greece, Kazakhstan, Peru, Philippines,
Poland, Portugal, Romania, Russia, South Africa Thailand, Turkey, Ukraine, Venezuela, Vietnam.
For comparison it can be noted that in prerevolutionary Russia the share of employment in the agricultural
sector were estimated to be from 76.5% [2] to 80% [3], the share of employment in
the industry — by 11,6% [2] to 17% [3]. This is much closer to today’s Sudan than to other industrialized
countries in the region, but the revolutionary potential of the Russian Empire is hardly rising any doubts.
Secondly, such levels of investments prove us that workers of these countries are able to work properly
(there are absolutely no grounds to doubt in the
practicality of capital), whatever it seemed to Russian tourist-hamster’ fancy in images of Egyptian waiters
(apparently they work well, since every jerk-client, scraped up money for the weel long holidays in Egypt,
can feel himself like he is indeed a white man and can rest a bit from the continuous residence in the
knee-elbow position).

Thus, these worker-countries (the world’s workshops, and along with, the world’s massage parlours, if you
wish) are exploited by capitalist-countries (financial capital centers) on a global scale exactly the same way
as it does when the capitalist exploits worker at the microeconomic level. On the other hand, there are other
mechanisms for spillover of revenue. One of them, e.g., is difference in rates of exchange (due to deviation
from the real value of currency).

Excess of GDP by purchasing power parity over GDP at exchange rate characterizes the country as a
dependent, exploited: the actual value produced in the country is higher than its price on the world market
(due to an undervalued currency). To demonstrate this, let’s for convenience take imaginary economy
restricted to a single commodity, let it be «nail», and let’s simplistically imagine that in our hypothetical
country A «nail» costs 10 rubles. In country B — $ 1, the official exchange rate of $ 1 is 30 rubles. Then, for
a capitalist-country B the same nail in country A does not cost $ 1, but only 1 / 3 dollars, and for the same
dollar, what is price of nail in country B, capitalist from country B can now buy as many as 3 nail.
Accordingly, ceteris paribus, a A country’s currency is undervalued 3-fold.
The inverse ratio characterizes the country as a beneficiary, exploiter: the actual value produced in the
country is lower than its price on the world market (due to currency overvaluation, which is provided by
financial and political means, there is a redistribution of value in favor of the country: on its overvalued
money it can purchase more real values from countries with undervalued currencies; or a capitalist from the
beneficiary-country can acquire or produce the product at dependent country’s prices, mark it with the
attributes of his own brand and sell in fact the same product at a higher prices on the beneficiary-country’s
market protected by barriers).
The degree of deviation of these two indices from each other indicates the degree of overflow of the value
created by this country in favor of foreign trade partners (though at a certain level of economic power, this
potential difference can be a field for maneuver, e.g., that is what easily penetrating through the barriers
China actively uses, causing a fierce Western World’s bathert with its «artificially low» currency). The gap
between GDP estimates presented in Table. 2.

Table 2. The gap in the estimates of GDP by purchasing power parity and by the official exchange
rate
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Indicators Li bya Egypt Sudan Chad Ni ger Al geri a Tuni si a

GDP (purchasing power parity), billion $ (2010 est.) 89,03 500,90 98,79 18,59 10,58 254,70 100,30

GDP (official exchange rate), billion $ (2010 est.) 77,91 216,8 65,93 7,59 5,6 159 43,86

Gap, billion $ 11,12 284,1 32,86 11 4,98 95,7 56,44

T he gap as % of GDP by the official exchange rate 14,3 131,04 49,84 144,93 88,93 60,19 128,68

As we see, the Libya’s gap is the least of all gaps for these countries with a large margin from the rest. This
indicates that, although participating in the international division of labor, Libya is subject to international
exploitation in the least degree. That is Libyan regime leaves a significant part of surplus value wrung from
the workers at the disposal of the country (the absolute values of the gap can be regarded as a kind of
surplus value at the international level, but relative — as the rate of surplus value). This, again, can not
fail to disappoint Western partners. Look, let’s say (you can imagine a hypothetical example, when a
foreign capitalist’s investor makes / buys at local prices in a dependent country some product
— let it be «aluminum spoon» — and resells it to the metropolis under the fashion label «IKEYA» at
metropolis prices): the percentage on the invested capital in Egypt will be at least 131% — Wow! This is very
delicious! But in Libya the unfortunate capitalist with a unique spoon gets only some 14.3% — yes it is
indeed a complete lack of Freedom’n'Democracy! Where are watching, dang, Clinton?!

Although out of all countries Libya is the most urbanized and demonstrates the highest degree of
industrialization (possibly competing here only with Tunisia), the structures of economies of Egypt and
Tunisia seem to be more diversified, as can be seen on the diversity of exports and on decline of growth rate
during the last crisis (more deep decline of the indicator during the global financial crisis, up to negative
values, could indicate a narrow export specialization, lesser stability (decrease in demand for some
commodity groups are not compensated by other commodity groups) and a higher sensitivity of the
economy to fluctuations in world markets). Significant contribution to the GDP of Egypt and Tunisia is
making tourism (sales of recreational services to outside World, for what the region is ideal), so (the lion’s
share of revenue from tourism-related services not included in the export) the volumes of their exports
markedly inferior to the volumes of exports of Libya and Algeria, which focused more on the industrial
component and do not have the opportunity to develop a tourism industry for obvious reasons (in Algeria,
following the closure of socialist regime has started a bloody standoff with Islamic radicals, with their
rhetoric of jihad against foreign enemies; Libya was subjected to international sanctions, the latest ban
lasted from 1992 to 2004 and was finally withdrawn only in 2006, and the constant harassment /
demonization through the Western media, which excluded the development of this industry).
It will be interesting to note that structure of exports of these countries (among industrial) generally
coincides with the Russian one (leaving aside the civil and military products yet not finished remains of
Soviet production, which in Russian exports is not the defining component, about 5%, and after such kooky
as the refusal to supply Iran with weapons stipulated by the contract, or voting for an embargo against Libya
and demanding payment for the undelivered weapons, I think fewer and fewer will be fools to communicate
with Russia).
On the example of these countries we can see that politics is the continuation of the economy. Such
countries as Egypt and Tunisia in full and without reservations are integrated into the vertical economic
structure of the West (as a dependent worker-countries). In their policies they completely follow the West’s
waterway. Therefore, both Ben Ali and Mubarak, as recent events have demonstrated, for the U.S., EU and
their minions are «their sons of a bitch» not only in words but in deeds. Libya, which has a relatively
independent economic policy, thereby reducing the level of exploitation and inflicting loss of profits of the
West’s capitalists, is able to exercise independent character on the political scene too (see, e.g., Libya’s
contacts with the countries of non-grata, the political war with some European countries, or controversial
move Gaddafi at the UN General Assembly in 2009 [24; 25]). Hence it is always irritated attitude toward
Gaddafi, even at the seemingly completely normalized relations (the Western media have never ceased to
peck at him, presenting him as some perverted, abnormal and alien screw ball (Libyan freak), wich just has
to be tolerated, «because he has a crude»). While the Sudanese regime is completely fallen out of Western
economic schemes and, even worse, completely switched to the Eastern giants, and as result was generally
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removed from the list of business partners and was enqueued for destruction (just hands are busy yet).

Contents:

Part 1. Libya, its neighbors and a bit of political economy: The role of the region in the international division
of labor. — http://comradevader.wordpress.com/2011/03/27/part-1-libya-its-neighbors-and-a-bit-of-political-
economy-the-role-of-the-region-in-the-international-division-of-labor/
Part 2. Libya, its neighbors and a bit of political economy: Demography and Social Policy. —
http://comradevader.wordpress.com/2011/03/27/part-2-libya-its-neighbors-and-a-bit-of-political-economy-
demography-and-social-policy/
Part 3. Libya, its neighbors and a bit of political economy: Class analysis. —
http://comradevader.wordpress.com/2011/03/27/part-3-libya-its-neighbors-and-a-bit-of-political-economy-
class-analysis/
Part 4. Libya, its neighbors and a bit of political economy: The course of events and strategies. —
http://comradevader.wordpress.com/2011/03/27/part-4-libya-its-neighbors-and-a-bit-of-political-economy-
the-course-of-events-and-strategies/