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Missed Opportunities: Economic Effects of Potential Deep Trade Integration in the Levant

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  • Ianchovichina, Elena
  • Ivanic, Maros

Abstract

On the eve of the Arab Spring, economies in the Levant region were considering options for deep regional trade integration, but the spread of unrest that culminated into the Syrian civil war interrupted this process. Using new data for six Levant economies, including Egypt, Iraq, Jordan, Lebanon, Syria, and Turkey, set within a database suitable for global general equilibrium analysis, the paper assesses the medium-term economic effects of potential deep trade reforms in the Levant. The results suggest that all Levant economies could have gained considerably had they continued strengthening their trade ties. In per capita terms, Iraq could have gained the most, followed by Syria, Egypt, Jordan, Lebanon, and Turkey. Services liberalization would have led to greatest benefits, estimated to contribute between 70% and 95% of the overall estimated welfare gains from deeper trade integration. Other measures, including further liberalization of agricultural trade with Turkey, reduction in non-tariff barriers, and improved transport logistics, would have led to modest welfare gains. However, the effects on exports vary by country, sector, and reform instrument, and are estimated to be sizable for some sectors. These results are indicative of some of the opportunity costs of the political conflict in the Levant and should be factored into assessments of its long-term costs on the Levant economies.

Suggested Citation

  • Ianchovichina, Elena & Ivanic, Maros, 2014. "Missed Opportunities: Economic Effects of Potential Deep Trade Integration in the Levant," Conference papers 332526, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332526
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