Do intra-Arab labour flows promote regional economic integration?

The elimination of economic impediments and the dismantling of trade restrictions have become common features of economic integration across economies in the world. Many countries in several regions of the world have increased their intra-regional flows of productive factors; the Arab region has experienced an increase in labour flows, in particular during the period of the oil price boom. Consequently, remittances between Arab countries were increased; especially remittances obtained from Arab Gulf countries (GCC region). Using the panel data fixed effects estimation, this study investigates the relationship between remittances and economic integration in the Arab region, covering the period 1983–2003. Despite the existence of expanding intra-Arab labour flows, the paper argues that a continued expansion requires — in addition to other factors – a harmonization of the economic policies and removal of obstacles to intra-regional labour flows. Moreover, reducing differences in per capita GDPs of the Arab countries is important for enhancing Arab economic integration. A real desire to increase intra-Arab labour flows and subsequently economic integration is also required.