From the Promise of Industrialization to Bureaucratic Expansion and Private-Sector Fragmentation: How the Dream of Industrial Transformation Was Lost #9
Urban Transformation in Post-Colonial Cities – Damascus as a Case Study
Urban Transformation Series | Damascus as a Case Study | Article #9
The second article of Chapter Three | The State of Control: From Inequality to Urban Discipline | Urban Transformation in Post-Colonial Cities – Damascus as a Case Study
When we examine the trajectory of industrialization in Damascus since the 1960s, it is not enough to describe it as bureaucratic inertia or a series of bad decisions. What emerges is the systematic collapse of a project that had been promised to the city’s peripheries, then stripped away in the name of nationalization before those areas were pushed into the margins of a gray economy recognized only when the state wished to tax or criminalize it. This article traces that compound breakdown—from nationalization to fragmentation, and from the loss of local representation to the transformation of the industrial belt into a fragile fabric without voice or coherent project.
The story begins with the state itself. It chose to dominate the economic sphere through nationalization without possessing the institutional capacity to manage it, and without allowing local levels—municipal, professional, or civic—to participate in shaping the development path. The circle tightened further as the domestic market contracted within a restrictive political environment and was deprived of representation, flexibility, and initiative.
But the pressure cannot be understood without a third factor: the world economy. Over the same decades, global markets recovered, industrial competition intensified, and production standards rose. The Syrian economy, like many economies of the Global South, remained caught in a post-colonial equation reinforced by dominant powers and authoritarian intermediaries: cheap raw materials exchanged for expensive manufactured goods from the North. Industrial ambitions were therefore chasing a project that increasingly lacked protection, resources, and political legitimacy.
In this vortex, the factory was never fully born, the city was never fully built, and the local voice was rarely heard. What emerged instead was a gray mode of deteriorating production in which craftsmen learned to coexist with bureaucracy, the private sector negotiated for survival rather than growth, and industry shifted from a vehicle for improving living conditions into a fragile tactic for avoiding extinction.
First: From Nationalization to Monopoly—When the Economy Became a Distribution Machine
When the Syrian state began implementing nationalization policies in the early 1960s, it was acting within the ideological climate of rising socialism and searching for instruments through which to extend control over economy and society. Nationalization was supposed to redistribute wealth and launch a national industrial project capable of breaking the dominance of large landowners and traditional commercial elites. In practice, the trajectory moved in the opposite direction.
Once the state took control of major industrial enterprises, their economic viability declined. This was not only because bureaucratic management lacked the capacity to operate factories efficiently, but because the logic of operation itself changed—from production to employment provision. The model of the “secure job” displaced initiative, incentives weakened, and the industrial spirit gave way to a distributive system that linked job security to compliance rather than performance.
The public sector was unable to carry industrial development on its own, while the private sector was not allowed to fill the gap. What remained outside nationalization was largely small and medium industry regarded as economically marginal or politically nonthreatening. No actor was therefore left with both the capacity and the incentive to lead long-term capital accumulation.
An economy that was supposed to become a field of production instead became a mechanism for absorbing demands, maintaining political stability, and distributing salaries and positions through networks of loyalty. Employment expanded not only in factories but in the administrative bodies surrounding them and the service chains attached to them, without a productive project consistently measured by output.
Nationalization had promised transformation but became a monopoly over the economic field without the capacity to activate it. The market ceased to be a field of competition and increasingly became a map of control; the state was no longer the sponsor of transformation, but the manager of organized stagnation.
Second: The Disappearance of Local Authority—When Mediation Vanished and the City Fell Out of Planning
Despite their rigidity, nationalization policies might have been managed in ways that reduced their damage and preserved a minimum balance between local initiative and central decision-making. What happened in Syria after 1963 was different: intermediary structures between state and society were dismantled, the legal framework governing local levels was removed, and forms of local representation in the management of space—through municipalities, unions, or elected councils—were hollowed out.
These levels later reappeared in an inverted form. The Ba'ath Party dominated them, and local administrative councils became channels through which central authority communicated downward to implement national priorities rather than institutions through which residents communicated upward. Trade and professional unions similarly became mechanisms for integrating the middle class into central policy rather than independent bodies organizing work around sectoral needs and interests.
Through this dismantling and reconstruction, there was no longer an effective administrative, political, or union level capable of negotiating development projects or adapting industrial plans to the social and economic realities of peripheral neighborhoods. Even when the state issued “industrial zoning” decisions for the edges of Damascus, they were made in closed offices and implemented largely on paper, without governance mechanisms capable of producing balanced knowledge grounded in observable realities. The “knowledge facts” on which plans depended became vulnerable to manipulation and preference rather than being anchored in residents’ interests and implementation capacity.
Under these conditions, the city slipped out of active urban policy and into suspended planning. Peripheral areas were no longer treated as functional extensions of the capital, but as spaces drawn from above and then left dormant until an investor, project, or political decision might activate them. Often, none arrived.
As residents began building lives around this reality—constructing homes, opening workshops, and subdividing plots—there was no local institution capable of negotiating on their behalf, regularizing their presence, or reconnecting land registration with actual urban use. Everyone had to deal with distant, overloaded central institutions that were often unable to respond and sometimes uninterested in doing so.
The absence of industrialization was therefore not simply a matter of weak political will; it also reflected the inability to adapt plans to reality. Zoning remained ink on paper, implementation remained captive to central orders, and the city expanded according to a logic of survival rather than public policy.
Third: Private-Sector Fragmentation and Bureaucratic Expansion—from a Productive Project to a Contract Without Voice
As the state’s horizon narrowed and no local intermediary structure existed to correct the course, the private sector did not disappear; it changed position and role. From a potential partner in a national productive project, it became a shrinking actor adapting to a hostile environment. Expansion ceased to be the central question. Survival took its place: how do you continue without being noticed? How do you profit without becoming a target? How small must you remain to avoid nationalization, absorption, or strangulation?
The size of the enterprise became a defensive strategy: the workshop rather than the factory, the craft rather than the company, unregistered employment rather than long-term investment. No contracts, no permits, no formal instruments. Everything functioned, but in the shadows—economic activity managed through neighborhood relationships and alleyways rather than ministry plans.
This pattern was not merely a reaction to nationalization; it reflected the structure of governance itself. The state built apparatuses of control more readily than institutions of development. Registration was complex, taxation burdensome, environmental standards costly, and licenses often depended on mediation rather than predictable law. Under these conditions, evasion became normal and survival increasingly depended on remaining outside the formal field.
A daily logic of adaptation emerged: employment without contracts, untreated waste disposal, stolen electricity tolerated through informal arrangements, and standards violated without consistent accountability. Much of this occurred with the state’s knowledge and tacit tolerance, as part of a silent accommodation. The informal economy was not simply an accidental defect; it became useful to an authoritarian system.
As I argued in a conceptual paper submitted to UNDP, this gray economy can be used as a political instrument: it is allowed to operate without registration, taxed through estimation rather than transparent accounting, and supplied with services without formal integration. The result is an economy without documents and without voice, subject to permanent oversight that can be activated whenever needed.
Within the “51%” theory I have developed, an authoritarian system seeks to control the decisive majority of the formal economy through loyalty. What remains is pushed into a gray zone where it can operate without acquiring the standing to make claims. Investments whose loyalty cannot be controlled are excluded from formalization: they are neither licensed nor registered, but often not fully prohibited either, remaining under the shadow of estimated taxation and deferred enforcement.
Taxation then becomes an instrument of political sorting:
Those who are formally registered can make claims.
Those who are taxed by estimation remain in the shadows.
Estimated taxation does not mean precise accounting. It is an opaque, approximate assessment of economic activity by tax authorities without complete documentation or formal records. This leaves the taxpayer permanently vulnerable, excludes their data from the macroeconomy, deprives them of protection, and prevents planning from reflecting their real contribution.
Fragmentation was not only a strategy for hiding. It also became a mechanism for distributing the wealth that filtered downward. Just as the state secured loyalty by expanding the bureaucracy and distributing salaries through low-productivity institutions, it allowed fragmented private activity to benefit from an “economy of tolerance”: stolen electricity, verbal permissions, estimated taxes, and implicit privileges. National wealth was therefore distributed through two parallel channels:
Disguised unemployment in the public sector as a means of political containment,
and a fragmented economy as a mode of collective adaptation, receiving scraps of privilege while preserving a minimum level of economic activity.
This amounted to a silent social contract: no representation in exchange for limited accountability, no ambition in exchange for survival, no voice in exchange for tolerance. The state did not demand full disclosure of what remained undeclared, and citizens did not ask for more than the system permitted. The private sector was allowed to work, but never invited to participate. It was not an actor in a national project, but a party to the administration of survival. That was precisely useful to power: an informal economy working in the shadows, without documents or voice, subject to estimated taxation that could at any moment become a security summons.
Over time, fragmentation shifted from exception to rule and from temporary circumstance to organized logic. Time did not produce accumulation; it produced miniaturization. Every enterprise that grew became more visible, every expansion attracted scrutiny, and every violation could be punished or distorted. Small workshops were protected, paradoxically, by their smallness and by the law’s partial blindness to them.
Even when new opportunities appeared under the label of “economic feasibility,” they were often based less on productive efficiency than on privileged forms of arbitrage. Elites allied with power obtained advantages to assemble Chinese goods and sell them as national products under tariff protection, while manufacturers who complied with standards could lose to neighbors who stole electricity and employed workers without contracts.
Fragmentation thus became not only an economic form but a political mechanism. The state preferred it because it posed little organized threat, and the private sector accepted it because it reduced the cost of confrontation. Such an economy did not generate a confident middle class or establish a national productive base, but it kept everyone in a condition of permanent weightlessness—distributing scraps to the margins and criminalizing success when necessary.
Fourth: An Unprotected Market in an Unforgiving World—the External Barriers to Industrial Revival
While Syria was constraining its private sector, dismantling local representation, and subordinating economic life to political loyalty, global markets were moving in a very different direction. From the 1970s into the early twenty-first century, trade liberalization accelerated, tariff barriers fell, and supply chains expanded. The world became more competitive and less forgiving toward emerging economies that lacked domestic protection and adaptive capacity. Syria was not alone in this experience: many post-colonial states of the South suffered repeated disappointments in national industrialization. But Syria became a particularly stark example of economic exposure:
No effective tariff protection,
no stable development finance,
and no domestic market capable of absorbing production.
In the absence of domestic industrial capital capable of growing, and without a genuine partnership with the state, investment in industry became difficult to justify. Each new wave of market opening, exchange-rate volatility, or changing import rules pushed small factories another step backward; workshops closed, and skilled craftsmen shifted into import trade or work in the Gulf. These external forces did not merely hinder industrialization; they deepened the domestic vicious circle. Every failure to compete with imported goods reinforced the belief that local production was “unviable,” every retreat in state support increased vulnerability, and every barrier to finance intensified fragmentation.
Above all, another less visible factor was at work: the limited international legitimacy granted to autonomous local industrialization. Syria, like many Southern states, was given little opportunity to enter global value chains on favorable terms and was more often treated as a consumption market, a source of labor, or an arena for proxy conflict. Under that degree of exposure, how could a durable factory system be built?
External breakdown therefore reflected not only structural weakness but strategic isolation: no reliable protection from the state, no dependable support from abroad, and limited access to markets. Domestic dysfunction and external disconnection reinforced one another, closing a recurring cycle of failure.
Conclusion: When the Factory Disappeared, the City Began to Deform
In the mid-twentieth century, the edges of Damascus were supposed to become organized industrial suburbs that would relieve pressure on the city center, absorb waves of rural migration, and provide jobs capable of reshaping residents’ relationship with the city as producers rather than dependents. The opposite occurred. Areas planned for factories became an uneven mixture of modest housing, improvised workshops, and gray markets.
This transformation was not simply an implementation failure. It followed directly from the disappearance of local authority, industrial fragmentation, and the absence of incentives for long-term investment. In a hostile legal environment, without secure property rights or effective infrastructure, the suburbs lost their attractiveness as locations for genuine industrialization. Few investors will build a factory on land whose ownership cannot be secured, invest in a building that cannot obtain a permit, or employ workers who cannot be formally registered.
Under these conditions, the factory disappeared from the landscape and was replaced by the small workshop—or something smaller still: a repair shop, a temporary production point, or an informal street market. Areas such as Qaboun, Jobar, Barzeh al-Balad, and Harasta, which had been designated industrial zones on planning maps, evolved into unlicensed residential and occupational districts living at the edges of law and governed by a logic of survival rather than development.
This deformation changed the function of space itself. The industrial belt ceased to be a productive zone feeding the city and became a fragile belt inhabited by residents without representation, craftsmen without protection, services without infrastructure, and an economy the state recognized mainly when it wished to collect taxes or criminalize expansion.
The fragility of space did not stop at physical form; it also reshaped urban identity. Areas that were meant to serve as functional extensions of an emerging capital became something closer to a “permanent temporary space”—built and demolished, expanded and marginalized, recognized at one moment and denied at another, without genuine integration into planning or citizenship.
Because this pattern endured for decades, later attempts at reorganization or regeneration encountered a bitter reality: what was built in the absence of law cannot easily be regularized by law, and what grew outside the plan cannot be brought inside it without enormous social cost.
Closing Note:
After presenting the case study of the Yaghmour, Baghdadi, and Jawhar factory, the next article moves from the structure of the economy to the structure of space. How did this vicious circle deform the legal and urban topography? Why did people’s formal ownership cease to correspond to the spaces where they lived or worked? Article #10 opens the map of spatial inequality between what was planned and what was actually occupied, showing how the margin became the heart of the city, the factory became a ruin, and property itself became a puzzle.
