Adding Value to Lebanon

The discussion about identifying valuable areas of economic growth for Lebanon is a very, well….. valuable one! I started by adding a comment to Raja’s post [Assignment for all Lebanese: think about what you want for Lebanon!] but then decided to write a full entry.

Firas, your first point reminded me of a book I read when I was younger. It's by Jean Giono, a famous French author, and it's called (translating the title literally from French): ‘the man who planted trees’. It's a simple story, about a simple man who wakes up every morning, takes the acorns that he has carefully sorted, walks up to a barren area of the mountain, and plants the acorns. He does this for years, and so he can witness the growth of trees he has planted a few years back. All it takes is some willingness.

Doha, I agree with Raja that retail is not a high-value area to explore for Lebanon, unless we really find goods which are produced in a special way. But there can be high-value opportunities in what seems to be traditional areas, like agriculture. I mean, we import so many kinds of fruits and vegetables (did anyone try to buy a broccoli in Lebanon? They are so expensive, while in the UK they are among the cheapest). Lebanon’s climate allows growing a very wide variety of vegetables. I don’t think broccolis require very special conditions. Of course, there is the cost of going into such ventures, but some agricultural products are quite at the high end of the food chain, such as mushroom, avocados, etc.

It seems there is a consensus that Lebanon’s competitive advantage is situated in the services industry. That is what some of you termed ‘the knowledge economy’ and ‘medical tourism’. Those are definitely areas where Lebanon is ahead of other countries in the region, but time must not be wasted: Dubai is also capitalizing on those areas, and investing in them. Raja, the figures that you posted on the cost of doing business in Lebanon indicate that we have an overall advantage over the region, although we may not be as business-friendly as the OECD yet. Dubai has specifically created a ‘knowledge city’, with all sorts of research and technology resources. As for medical and university staff, they are able to draw qualified people thanks to attractive salary packages and quality of life.

I believe Lebanon has to find its niche goods-and-services areas to be a healthy participant in the global economy. There is no way Lebanon can compete with countries that benefit from economies of scale, with low labour costs. Lebanon therefore has to target certain high-end markets by producing high-end goods and services. This will require aggressively expanding our export markets. And I believe everyone could win from such a situation! For example, I live in London, a very cosmopolitan city. So you would expect to find foods from all over the world. Well, you probably do, but you have to look for them (for example you would have to go to certain neighborhoods where Chinese, Arab or African communities live, or to specific gourmet places). Today for instance, I spotted some ‘jarareng’ in a little Lebanese-run grocery. They were overpriced, but I still bought them, perhaps to remind myself of the smells and flavours of Lebanon. The high price would be explained by the fact that the supply of such goods, unique to Lebanon (if I am not mistaken), is extremely limited in the UK. But were Lebanon to expand its distribution channels, these products would enjoy larger export markets, while still commanding reasonably-high prices, which would in turn help maintain the production of such agricultural goods.

An important point in any growing economy is job creation. The challenge for Lebanon will be to find industries that can generate enough employment opportunities to absorb both skilled and less skilled members of the labour force. As you mentioned Doha, I feel Lebanon at the moment is very much a consumer society, rather than a producer society. There seems to be much more investment in consumption ventures, such as restaurants, entertainment, etc., than in productive ventures. Of course, all of these create a demand for jobs, but a country is better off in the long run when investment goes into “forward-looking” areas, such as R&D.