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Transition in the MENA Region: Challenges, Opportunities and Prospects

Author

Listed:
  • Vladimir Gligorov

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Peter Havlik

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Sandor Richter

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Hermine Vidovic

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

This paper discusses the transition agenda and provides the key economic characteristics of selected Middle East and North Africa countries (MENA) in comparison with selected Central, East and Southeast European countries (CESEE). We intend to identify some regularities in transition processes and to draw policy lessons for MENA countries. Among the key challenges facing the MENA region are job creation, fighting corruption, public sector reforms and trade diversification; the way towards a functioning market economy should not necessarily be as long and controversial as in the CESEE. MENA countries had been implementing market-oriented reforms for more than a decade. Together with free trade agreements concluded with the EU, these reforms have contributed to an increase of FDI inflows. Still, MENA countries have been lagging behind in terms of export performance, competitiveness and restructuring. Numerous impediments to trade and FDI in the MENA region need to be overcome, yet the transition will not require a radical overhaul of the existing system. The sine qua non condition is to achieve high per capita GDP growth. There is no guarantee for success – as illustrated by the experience of CESEE. Moreover, the current global crisis makes policy implementation not easier. If anything, future scenarios must reckon with a slow process of improvements and many backlashes. Transitions and sustainable reforms need to be anchored in a supportive international environment. In the case of many CESEE countries, the EU provided such an anchor. In the case of MENA, such a strong anchor is missing. A newly designed international involvement and especially the strengthened role of the EU will play a crucial role. A comprehensive EU-MENA trade agreement, possibly with an intra-MENA (and Turkey) Customs Union arrangement, would be beneficial to both MENA and the EU.

Suggested Citation

  • Vladimir Gligorov & Peter Havlik & Sandor Richter & Hermine Vidovic, 2012. "Transition in the MENA Region: Challenges, Opportunities and Prospects," wiiw Research Reports 376, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:rpaper:rr:376
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    File URL: https://wiiw.ac.at/transition-in-the-mena-region-challenges-opportunities-and-prospects-dlp-2550.pdf
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    References listed on IDEAS

    as
    1. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1996. "Contagious Currency Crises," CEPR Discussion Papers 1453, C.E.P.R. Discussion Papers.
    2. Bonin, Holger & Rinne, Ulf, 2006. "Report No. 8: Evaluation of the Active Labor Market Program "Beautiful Serbia"," IZA Research Reports 8, Institute for the Study of Labor (IZA).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    transition; integration; foreign trade; FDI; labour market;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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