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The Iraqi economy and trade dependence to the outside world.

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The Iraqi economy and trade dependence to the outside world.

15/08/2016 13:13

Hamid Abdul Hussein Al-jibouri/Euphrates Center for development and strategic studies


Origins the term dependency to (children) that calls on States that were under the control of colonial powers: politically, economically and militarily. Etc without concrete involvement by national population.

The word continued dependency until after I got most of those States to political independence, why continue? Because the economies of those States remained subordinate to the economies of developed countries directly and indirectly.

Causes of access can be traced to the outside world trade dependence, which are interrelated to specialization and international division of labour, foreign loans, foreign investment and productive energy.

As developed countries specialize in producing high-priced manufactured and exported to developing countries while the developing countries specialize in producing low-priced raw materials and exported to developed countries, but the latter had a technological evolution to provide alternatives to products from developing countries as shale oil and shale gas, synthetic rubber and other such works reinforce dependency more deeply.

These States will need more foreign loans to foreign exchange of foreign currency needed to finance goods imported from abroad which are mostly consumables. Most of these loans will be conditional upon the subjective conditions as interest and repayment period and intrusive conditions on a borrower's country economy this becomes an independent economy and, in the case of payment of loan or find his service this will make borrowing country calls to swap loan value or serve some productive assets, any debt-for-equity in State-owned enterprises borrowed, so the work increases the size of ancillary to the outside world, turning lenders to investors and this makes economic and social policies are subject to more oversight.

Under globalization, which calls for the Americanization of globalization and profit losses which consists in removing barriers and free movement of capital, developing countries become more developed countries, the size of foreign investments will compete with domestic investments and making them less able to carry on productive process and withers away little by little, everything is imported and community all you need foreign investments from abroad in this growing trade dependence.

Weak national capacity as a result of lack of will and political independent national paint current and future economic plans that increase energy productivity, sedate this weakness makes the country less productive than goods and services needs are met from the outside world and that is what makes the country responds to meet the demands of the outside world and his consequential.

It is known that most of the developing countries, so rich in natural resources, suffering from a dependency for the outside world is dependent on the outside world to meet the needs of goods and services, and this demonstrated the weakness of their economies by weak productive base and its inability to compete with foreign goods, these political and economic effects of liability and social, to name a few, that the adoption of a country to the outside world make decisions is independent politically, economically and socially, which must take into account the interests The outside world which works to meet the needs of that country, that this country is suffering from colonialism, and any more dangerous than this?!.

Iraq is one of those countries experiencing trade dependency to the outside world, in order to determine those dependencies more accurately and they explained that Shen identify important indicators that show the dependency as follows:

1. business exposure index:

Which refers to the percentage of foreign trade (exports plus imports) to GDP, and whenever the result was large as this country's dependence on exposure to the outside world and vice versa means independence and subordination to the outside world.

We must bear in mind that you cannot rely on this index independently to judge a country's dependency, because there are some countries where this indicator is not subservient to the outside world relied upon to meet his needs and not vice versa. It should not exceed this index is 70% maximum size of GDP.

And through the use of statistical bulletin of Arab Monetary Fund for 2012 and 2015, the proportion of commercial vulnerability index over 75.5% of GDP on average for the period 2004-2013,

this shows how his disciples and exposure of the Iraqi economy to the outside world and not the other way around, since it is known that many cumulative problems of evolution and progress of the economy, such as the first and second Gulf war and economic blockades in the 1990s that caused the high inflation is very large, worsening the debt problem because of war and siege, And the occupation of Iraq in 2003 and increasing violence and deteriorating security between 2005-2007, global financial crisis 2008-2009, with continuing political differences yet. Etc, all this led to a deterioration of the Iraqi economy, he became a follower of the outside world.

2. commodity export concentration index:

Which is that the Iraqi economy is diversified economy on exports or that an economy dependent on the export of a single commodity or only very few?

Through the adoption of trade statistics Central Bureau of statistics, note that the Iraqi economy is suffering from a commodity focus of exports, the average commodity export concentration index more than 99% of total exports for the period 2004-2013,

this means that the Iraqi economy is agricultural, industrial or other goods but only 1% of total exports, while exports of mineral fuels ranked first among theTotal exports amounting to over 99%.

It is known, that features a strong oscillation metal fuel and as a result of the adoption of this Iraq will make the Iraqi economy economy continued to the outside world, has a production base produces what the community needs on the one hand, and on the other hand, mineral fuels, which features strong oscillation.

Since the ratio of commodity export concentration index should not exceed more than 70% of total exports, and is the maximum output, while commodity focus indicator mineral fuels exports in Iraq accounted for more than 99%, the Iraqi economy is an economy of the outside world.

3. geographic focus indicator for exports:

What is the Iraq issue the output for a specific country or region or group of States or regions?

This index starts from the premise that the State as a private investor who diversified in order to reduce portfolio risk diversification is required, not in goods, but also by States, so if you shut the familiar markets before it can turn quickly and with the least possible losses to alternative markets.

And by looking to the Arab Monetary Fund statistical bulletin for 2012 and 2015, note that the average for the period 2004-2013 suggests that Iraq continued commercially based on this index because the average percentage this index are (47.29) is greater than the standard gauge, which should not exceed more than 40% is the limit of GDP, most of the exports of the two United States and India.

4. the average slope indicator for import:

Commercial dependency appears clearly when measured by average ratio of imports to GDP and is known as the average propensity consumption.

The importance of this clear indicator that lead us to the dependence of the State on the outer world countries import commodity needs, in the sense that it reflects the national production of the dependency of global production, so that the greater the proportion of this indicator signifying the adoption to the outside and vice versa.

The value of this index varies from year to year, highest in 2004 when she was 39%, while the lowest in 2008 when it stood at 20.67%, namely that this index ranging from 39.49% and 20.67%, this decrease can be attributed to the decline in oil prices caused by the low volume of imports and then lower the value of this indicator, the average orientation accounted for import to 27.97% GDP average 2004-2013.

In conclusion, all the above indicators clearly indicate that the Iraqi economy economy continued to outer world trade accounted for more than commercial exposure index of 75.5% of GDP on average for the period 2004-2013 and is the largest percentage criterion (70%), formed the commodity focus indicator percentage of exports 99% of total exports as an average for the same period and are larger than the standard rate (70%) and accounted for geographical concentration index exports 47.29% of total exports as an average for the same period and are larger than the standard rate (40%),

and finally Medium slope index accounted for import 27.97% of gross domestic product to almost one third goes to the outside world to cover what is being imported and this great rate.

So, the solution lies in increasing commercial exposure but in reverse, i.e the outside world on Iraq and not the other way around, by working to increase competitive goods, manufacturing sectors should be activated, agricultural, tourist and other and this reduces the concentration of export commodity, work to achieve geographical distribution of exports from Iraq over country to reduce risks that can get under the geographic focus for exports, and that generally activating productive sectors reduces imports and this reduces the sharpness of the average slope. To import.

But these steps should never provide a favourable investment climate with political management key genuine national will have flexibility in dealing with professionals, particularly economists.

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