Globalization, Regionalization, and Recent Trade Agreements: Impact on Arab Economies Rapid Exogenous change - Slow Endogenous Response!

A review of recent studies that attempt to estimate the potential gain from the Arab region integration in the World economy indicates initial losses or insignificant gains. This is not surprising since the fundamentals of the economic structures and institutions in the Arab World are not developed or equipped for a highly competitive global environment. The paper reviews development in the Arab region, examines relevant recent experience from South East Asia, and attempts to outline an internal-oriented sustainable reform (IOSR). The paper makes the case that any outward-oriented reforms (OOR) or export-oriented industrialization strategy (EOI) must be part of an (IOSR). The latter should include as its fundamental elements: the development of human resources, equality of opportunities, transparency in governance, strong local demand, and sustainable environment. Lack of progress in IOSR, relative to that in OOR/EOI, could be a call for social unrest and costly economic losses.