How did the "market economy" accelerate  the decline of domestic industry?

Special – Written by: Muhannad Al-Zanbarakji

Strategic Planning & Risk Management Expert

  The destruction of a large part of productive assets, the disintegration of supply chains, and the bleeding of human capital necessarily led to a reduction in the operational capacity of the industrial sector, making the transition towards a new economic model not a transition from "balance" to "efficiency", but rather a transition from a state of deep imbalance to full exposure to market forces.

The Shock of Openness and the Competition Gap

The shift towards economic openness in 2024 and 2025 was an additional "structural shock." While economically openness is supposed to improve efficiency through competition, what happened in the Syrian case was a "rapid" liberalization of trade by lowering tariffs and expanding import incomes, without providing a platform for equal competition. The result? The influx of imported goods at prices lower than the cost of domestic production, which created a sharp price gap in favor of the foreign product.

This gap was not only the product of technical superiority or managerial efficiency, but was a reflection of a "structural cost imbalance", in which domestic products are burdened  by high energy prices, supply disruptions, scarcity of financing, and exchange fluctuations, while goods imported from stable economies with high productivity and subsidized or low energy costs are entered.

The trap of "margin squeeze" and forced withdrawal

In light of this disparity, industrial enterprises have faced what is known as "profit margin pressure", as it is no longer possible to price products at levels that cover costs and achieve sustainability.

With the inability to reduce costs internally as a result of runaway inflation, the Syrian industrialist found himself faced with two bitter choices: either sell at a loss that drains his capital, or exit the market altogether, which explains the recent wave of closures.

Lack of certainty. The Silent Killer of Investing

Costs were not the only constraint; the institutional environment played a role in deepening the crisis. Legislative instability and changing rules have created a state of "uncertainty", which in economic jurisprudence is no less dangerous than high costs, because it paralyzes the ability to plan for the long term and encourages a freeze in activity or withdrawal.

Policy sequence error

In strategic analysis, the "free market economy" was not a direct cause of the shutdown so much as it was an "accelerator factor."

The problem lies in the "policy sequence": successful international experiences require strengthening domestic competitiveness first (through support for energy, finance, and infrastructure), and then gradually opening up the market , while in the case of Syria, opening up preceded recovery, exposing a fragile sector to a shock that did not have the tools to absorb it.

Conclusion

The closure  of factories today is a structural cry that confirms that Syrian industry is fully exposed to unfair external competition, in the absence of "selective protection" policies or targeted production support, which requires an immediate review of the path of economic transformation before we lose the remaining pillars of national production.