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Catching Up With Eastern Europe? The European Union's Mediterranean Free Trade Initiative

Author

Listed:
  • Bernard Hoekman

    (The World Bank)

  • Simeon Djankov

Abstract

This paper discusses the potential role of a Euro-Mediterranean Agreement (EMA) in helping Middle East and North African governments implement structural economic reforms. The arguments for and against preferential liberalization are summarized, identifying a number of necessary conditions for an EMA to benefit a Mediterranean country. The recently negotiated EMA between Tunisia and the EU is evaluated, using these conditions as criteria. Some doubts are expressed regarding the benefits of an EMA and the extent it will help countries in the region 'catch up' with those in Central and Eastern Europe. Significant supporting and complementary actions are likely to be needed. Key issues in this connection are the regulatory regimes applying to inward foreign direct investment (FDI) and the service sector; a reduction in tariffs applied to the rest of the world; and the imposition of hard budget constraints on state-owned enterprises. These aspects are not subject to disciplines under the EMA.

Suggested Citation

  • Bernard Hoekman & Simeon Djankov, 1996. "Catching Up With Eastern Europe? The European Union's Mediterranean Free Trade Initiative," Working Papers 9612, Economic Research Forum, revised 04 1996.
    • Handle: RePEc:erg:wpaper:9612
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    Cited by:

    1. Jean‐Christophe Maur, 2005. "Exporting Europe's Trade Policy," The World Economy, Wiley Blackwell, vol. 28(11), pages 1565-1590, November.
    2. Bosco Maria Giovanna, 2012. "FDI in Turkey: An Out-Of-Sample Analysis Of Unexploited Potential," Review of Middle East Economics and Finance, De Gruyter, vol. 7(3), pages 1-21, May.
    3. Yener Kandogan, 2005. "Trade Creation and Diversion Effects of Europe???s Regional Liberalization Agreements," William Davidson Institute Working Papers Series wp746, William Davidson Institute at the University of Michigan.
    4. Alessandrini, Sergio & Resmini, Laura, 2000. "FDI in the Mediterranean Region: a Comparison with CEE Experience," MPRA Paper 26103, University Library of Munich, Germany.
    5. Foroutan, Faezeh, 1998. "Does membership in a regional preferential trade arrangement make a country more or less protectionist?," Policy Research Working Paper Series 1898, The World Bank.
    6. Hoekman, Bernard & Subramanian, Arvind, 1996. "Egypt and the Uruguay Round," Policy Research Working Paper Series 1597, The World Bank.
    7. Baccini, Leonardo, 2012. "Democratization and trade policy: an empirical analysis of developing countries," LSE Research Online Documents on Economics 44924, London School of Economics and Political Science, LSE Library.
    8. Bassem Kamar & Damyana Bakardzhieva, 2002. "The Reforms Needed to Attract More FDI in Egypt: Lessons from the CEEC Experience," Working Papers 0240, Economic Research Forum, revised 26 Dec 2002.
    9. Konan, Denise Eby & Maskus, Keith E., 2006. "Quantifying the impact of services liberalization in a developing country," Journal of Development Economics, Elsevier, vol. 81(1), pages 142-162, October.
    10. Iván Martín, 2004. "La inversión extranjera directa en los países del Maghreb en el marco de la Asociación Euromediterránea: ¿el eslabón perdido?," International Trade 0405001, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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