World Bank Documentdocuments.worldbank.org/curated/en/929821468278677551/pdf/575200WP0... · Libya, Mauritania, Morocco, and Tunisia), and the . Mashreq (Iraq, Jordan, Lebanon, Syria,

WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION

INTEGRATION IN THE MASHREQ

ECONOMIC

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57520

Economic Integration in the Mashreq

Office of the Chief EconomistMiddle East and North Africa RegionThe World Bank

WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION OCTOBER 2010

©2010 The International bank of Reconstruction and Development/The World Bank1818H Street, NWWashington DC 20433Telephone: 202 473 1000Internet www.worldbank.orgE-mail [email protected]

All rights reserved.

This volume is a product of the Social and Economic Development Group of the Middle East and North Africa Region of the World Bank. The findings, interpretations, and conclusions expressed herein are those of the author (s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the govern-ments they represent.

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Cover photograph: © World Bank/Bunyad Dinc.

A FREE PUBLICATION

ContentsAcknowledgements iv

Foreword v

Acronyms and Abbreviations vii

Executive Summary 1

1. Participation In Integration Agreements 2

2. Integration through Trade, Capital and Labor Flows 4

3. Integration through Physical Infrastructure 11

Conclusion 14

References 15

Boxes

Box 1 Trade Routes and Corridors in the Mashreq 12

Tables

Table 1 International Migrants by Development Group and Arab World Sub-regions 10

Figures

Figure 1 MENA Trade by Country Sub-groups, 2007 5Figure 2 Regional Exports as % of Total Exports, 2007 5Figure 3 Concentration and Diversification Indices of Export Products

in MENA 6Figure 4 Trade in Commercial Services *(% GDP) 7Figure 5 Ease of Doing Business Ranking 8Figure 6 Logistic Performance Index 8Figure 7 Remittances, FDI and ODA 9Figure 8 Remittances as Share of GDP 2007 in Mashreq Countries 9

Annexes

Annex 1 Trade Agreements in the MENA Region 17Annex 2 Statistical Tables 18

iv

Acknowledgements

This report was prepared by Mustapha Rouis under the guidance of Farrukh Iqbal, Acting Chief Economist, and Shamshad Akhtar, Vice President, Middle East and North Africa Region. The author is grateful to Lili Mottaghi, Marie Alienor van den Boschand, and Komlan Kounetsron for their inputs and to Ali Al-Abdulrazzaq, Jorge Araujo, Hafed Al-Ghwell, Bernard M. Hoekman, Elena Ianchovichina, Far-rukh Iqbal, and Christina Wood from the World Bank for their comments on earlier versions of the report. Isabelle Chaal Dabi and Liliane Vert (World Bank) provided valuable administrative assistance and Amanda Green (Consultant) edited the report.

A C K N O W L E D G E M E N T S

v

ForewordThough the Middle East and North Africa (MENA) region has weath-

ered the recent global financial and economic crisis relatively well,

it still faces daunting medium-term challenges. These include high

unemployment (especially among young people), vulnerability to oil

and food price shocks and water scarcity and inefficiencies of public

sectors. Integration of the region into the global economy has been

slow. Of particular concern is the stagnation in the region’s share of

global non-oil exports, an indication of missed opportunities for di-

versification and growth. Integration within the region, while rising,

is also on the low side when compared with other middle- and high-

income regional blocs.

Over the last year or so, there has been an increasing momentum on the part of the region and the World Bank Group to focus on a set of initiatives to promote more cooperation within the region. These initiatives include a host of analyt-ical pieces to examine the current state of regional collaborative arrangements with emphasis on assessing and explor-ing ways of fostering greater trade inte-gration, labor mobility and migration prospects, prospects for energy integra-tion and resource sharing and infrastruc-ture development to reduce nontariff barriers.

The region has been able to make some inroads, albeit at different degrees in each of the geographical groupings, to support the integration of the Arab world into the global economy. To start off the removal of intra-regional tariffs under the Pan-Arab Free Trade Area (PAFTA)

and the adoption of low common tariffs by the Gulf Cooperation Council (GCC) which coupled with improvements in infrastructure, especially roads and tele-communications is generating benefits. But much remains to be done, espe-cially in reducing nontariff barriers to trade, harmonizing policies and proce-dures, and facilitating cross-border trade through development of infrastructure links and trade facilitation. Fortunately, trade in services has recently emerged on the agenda of national and regional authorities—this is an area of substantial potential welfare gain for the region.

Recognizing the problems, the World Bank has been working closely with the MENA region to develop and imple-ment regional activities—investment projects, institution-building, harmoni-zation of policies and procedures—that are likely to enhance economic growth

F O R E W O R D

vi

and address common challenges across the re-gion. As part of this endeavor, the Office of the Chief Economist, MENA Region, has pre-pared a series of reports to assess the achieve-ments of the region with respect to integration. The first report, “2008 Economic Developments and Prospects,” looks at the role of integration in global competitiveness for the region as a whole and special reports have been pre-pared to take stock of the regional cooperative frameworks, their issues and prospects. These reports examine economic integration among three sub-regions: the Gulf countries (Bahrain,

Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), the Maghreb (Algeria, Libya, Mauritania, Morocco, and Tunisia), and the Mashreq (Iraq, Jordan, Lebanon, Syria, and West Bank and Gaza). Egypt is sometimes classified in the literature as a Mashreq coun-try though with ties with North Africa given its location.

Shamshad AkhtarVice President

Middle East and North Africa RegionThe World Bank

vii

Acronyms and Abbreviations

AMF Arab Monetary FundAMU Arab Maghreb UnionASEAN Association of Southeast Asian NationsAWI Arab World InitiativeCOMESA Common Market for Eastern and Southern AfricaECO Economic Cooperation OrganizationEFTA European Free Trade AssociationESCWA Economic and Social Commission for Western AsiaEU-MFTA EU-Mexico Free Trade AgreementEUROMED Euro-Mediterranean Free Trade AreaEU European UnionFDI Foreign direct investmentGAFTA Greater Arab Free Trade AgreementGCC Gulf Cooperation CouncilGDP Gross domestic productIMF International Monetary FundIT Information technologyMENA Middle East and North AfricaMERCOSUR Mercado Común Sur (Argentina, Brazil, and Uruguay)NAFTA North American Free Trade AgreementODA Official Development AssistancePAFTA Pan-Arab Free Trade AreaPTAs Preferential Trading ArrangementsTRIST Tariff Reform Impact Simulation ToolUAE United Arab EmiratesUNCTAD United Nations Conference on Trade and DevelopmentWBG West Bank and GazaWTO World Trade Organization

1

Executive Summary

This report reviews the status of Mashreq countries’ economic inte-

gration with the world, with the Arab world, and within the Mashreq

subregion itself. It examines the drivers of progress to date and barri-

ers to further integration. It focuses on Mashreq countries’ participa-

tion in integration agreements; integration through trade, labor, and

capital flows; and physical infrastructure.

The main findings are that Mashreq countries trade more with the European Union (EU) than with other countries in MENA or among themselves, but ac-count for a significant share of MENA’s trade in services. With the exception of Iraq, a major oil exporter, the Mashreq countries export a relatively large share of manufactured goods—surpassed only by Tunisia and Morocco. Mashreq exports

are relatively less concentrated than other MENA countries, with the exception of Tunisia and Morocco.

Regional economic integration would be enhanced through better trade facilita-tion procedures and by better transport infrastructure. Policies relating to further improving the investment climate and private sector development also matter.

2

Chapter 1 Participation In Integration Agreements

The Mashreq subregion includes five countries: Iraq, Jordan, Lebanon, Syr-

ia, and West Bank and Gaza (WBG). Egypt is sometimes classified in

the literature as a Mashreq country. In 2008, the Mashreq subregion

had a population of 60 million (18 percent of the total MENA popu-

lation), a gross domestic product (GDP) of US$ 162 billion (8 percent

of the MENA region’s total GDP), and per-capita income of US$

2,540 (less than half the region’s average). The subregion (excluding

Iraq and WBG) grew at 4.7 percent during 2000–2008.

Arab countries, including the Mashreq, are involved in multiple trade agreements among themselves and with African states, the EU, and the United States (Annex 1). Of the five Mashreq countries, only Jordan is a member of the World Trade Organization (WTO). However, several countries in the Mashreq participate in bilateral and re-gional integration agreements or in subregional economic blocs.

The Pan-Arab Free Trade Area (PAFTA) agreement was signed in 1997 and became effective in January 2005. The eighteen Arab country members of PAFTA (including the five Mashreq countries) account for over 80 percent of total MENA trade. The main pro-visions of PAFTA concern the progressive removal of tariffs (by 2005) and nontariff barriers to trade in goods among members. More recently, signatories of PAFTA have launched efforts to further integrate trade and investment in services, and to address nontariff measures that restrict trade flows. Little is known about the extent to which PAFTA’s provisions have been implemented. To address this question, a survey of trading firms in nine PAFTA countries (including three Mashreq countries: Jordan, Lebanon, and Syria) was conducted (Hoekman and Zarrouk 2009). The sur-vey covered official trade and tax policies, administrative requirements confronted by traders, and the costs and quality of transport infrastructure. The main findings of the survey were that PAFTA had been beneficial through the removal of tariffs on intra-PAFTA trade, and through a marked improvement in customs clearance procedures.

The Agadir Agreement for the Establishment of a Free Trade Zone (Agadir) was signed in Rabat, Morocco, in 2004. Original members include Tunisia, Morocco, Egypt, and Jor-dan, with the potential to expand to Algeria, Lebanon, Libya, Mauritania, Syria, and

PA R T i C i PAT i O N i N i N T E G R AT i O N A G R E E M E N T S C H A P T E R 1

3

WBG. The EU supported the agreement with the aim of establishing a free trade area and as a possible first step in the establishment of a Euro-Mediterranean Free Trade Area (EU-ROMED).

In addition to these regional agreements, some Mashreq countries have entered into bilateral agree-ments with the United States, EU, and Turkey. The 1995 Barcelona Conference set the ambi-tious goal of establishing EUROMED, which would include the EU and MENA countries. This goal is to be achieved through associa-tion agreements between the EU and MENA countries and free trade agreements among MENA countries. Three Mashreq countries have already signed an association agreement with the EU: Jordan in 1997, WBG in 1997, and Lebanon in 2002. Syria initiated discus-sions in 2008. Using the augmented gravity model for all MENA countries for which as-sociation agreements have been signed, Cies-lik and Hagemejer (2007) found that, while these agreements have significantly increased

MENA countries’ imports from the EU, they have had no positive impact on their exports to the EU. A recent World Bank report (Pigato 2009) noted that preferential agreements with the EU have not helped MENA countries in general withstand competition from China and India.1

All Mashreq countries are members of the League of Arab States, which has historically taken the lead on integration efforts in the region. The League’s ob-jective is to “draw closer the relations between member States and co-ordinate collaboration between them, to safeguard their indepen-dence and sovereignty, and to consider in a general way the affairs and interests of the Arab countries.” Through its various institu-tions, the Arab League helps to facilitate po-litical, economic, cultural, scientific, and social affairs among its members. Since its inception in 1945, the League has served as a forum for member states to coordinate their policy posi-tions, to deliberate on matters of common con-cern, and to settle disputes.

1 They have partially helped maintain a market in Europe, but the EU rules of origin may impede MENA’s further export growth. They are strict, requiring a double transformation in qualifying countries. As a result, most of the inputs MENA produc-ers use for exports to the EU come from Europe. Preferential agreements have thus locked MENA producers into production structures that shelter them from competition and handcuff their ability to source inputs from other locations. See Pigato (2009), page xxii.

4

Integration through Trade, Capital, and Labor Flows

Trade Volumes

While Mashreq countries comprise the smallest share of total MENA trade, they account for a higher share of the trade within the region, apart from the Gulf Cooperation Council (GCC). The Mashreq countries account for only 8 percent of MENA’s total trade (with or without oil), while GCC countries represent 60 percent of MENA trade, and Maghreb and other countries account for more than twice the share of the Mashreq (16–17 per-cent). If trade within MENA is considered, however, the Mashreq’s trade accounts for a much higher share (15 percent) than all country groupings except the GCC. Trade within the Mashreq subregion accounts for 15 percent of its total trade within MENA.

While the overall trade volume (as a share of GDP) of Mashreq countries is significantly lower than the MENA average, nonoil trade is only marginally lower (Figure 1). Valued at about 66 percent of GDP in 2007, the trade volume of Mashreq countries is below the aver-age for MENA countries (76 percent) and GCC countries, but about the same as the average among lower-middle-income countries (61 percent). When nonoil trade is considered, the Mashreq average of 30 percent of GDP is close to the MENA average (37 percent) and similar to other country groupings in the region. It is, however, far below the average for lower-middle-income countries. Thus there is much to be done on trade promotion and competitiveness if the Mashreq countries (and other subre-gions in MENA) are to achieve meaningful trade within the region and the subregions.

Mashreq countries trade more with EU countries than they do among themselves and within the MENA region. The EU is the main trading partner of Mashreq countries, accounting for 25 percent of exports and 28 percent of imports in 2007. The GCC is next in im-portance, with nearly 7 percent of Mashreq exports and about 17 percent of Mashreq imports. Only about half of imports from the GCC are nonoil products, and a large share of the value of these is of Asian origin. The proportion of imports from the EU is highest in Lebanon (over one-third) and lowest in Iraq (about one-seventh). Iraq is the largest exporter to the EU, mainly of crude oil. Reported trade with Asia is insig-nificant; most trade flows via the Gulf or other trading locations.

Mashreq countries have not taken full advantage of regional economic integration despite the existence of regional economic agreements. MENA and its subregions trade less among themselves than with other regions, with the GCC doing a bit better and the Maghreb trading the least (Figure 2). Intra-Mashreq nonoil trade accounted for only 6 percent of total trade in 2007. Although this compares favorably with other subregions in MENA (such as the GCC and Arab countries), the Mashreq lags behind interna-

Chapter 2

5

i N T E G R AT i O N T H R O u G H T R A D E , C A P i TA L , A N D L A b O R F L O W S C H A P T E R 2

tional benchmarks such as ASEAN, the EU, and NAFTA. There is a great deal of variation among countries. Syria conducts as much as 42 percent of its nonoil trade within the Mashreq, while the corresponding figure for Iraq is less than 3 percent. Syria and Lebanon seem to trade more with each other than other coun-tries in the group. Syria is also Iraq’s main trading partner in the subregion; Iraq imports nearly one-third of its total nonoil imports from Syria.

Among the Mashreq countries, Jordan, Syria, and WBG trade the most within the MENA region. Over three-quarters of WBG’s trade in 2007 was with MENA countries, followed by Jor-dan (one-third), Syria (one-fourth), and Leba-non (one-fifth). The two countries outside the Mashreq subregion that trade significantly within MENA are Djibouti and Kuwait. For most Mashreq countries, there has been a significant improvement in trade since 2000, with Syria showing a fourfold increase. Syr-

ia’s relative success can be attributed to the government’s efforts since the early 2000s to implement trade reform and export diversifi-cation (World Bank 2009c).

An International Monetary Fund (IMF) study (Rodol-phe 2001) shows that international and intraregional trade in the Mashreq (defined to include Egypt and Israel and exclude Iraq) are below levels predicted by the gravity model.2 At least three policy variables

FiGuRE 1 MENA Trade by Country Sub-groups, 2007

Other MENA

0

20

40

60

80

100

MENA GCC Maghreb Mashreq Other

Sub-region Rest of the World

0

10

20

30

40

50A. Total Trade (% GDP)

MENA GCC Maghreb Mashreq Other

B. Total Non-Oil Trade (%GDP)

Source: Annex 2, Tables A2.2 and A2.4.

FiGuRE 2 Regional Exports as % of Total Exports, 2007

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

MaghrebMENA (other)

MENAMashreq

GCCMERCOSUR

ASEANNAFTAEU-25

Source: Annex 2, Table A2.1.

2 See also Lee and Gohar (2009) who found, using a conventional gravity model, that the majority of Arab economies trade less intensively with each other, though countries that are closer to each other trade relatively more.

6

C H A P T E R 2 i N T E G R AT i O N T H R O u G H T R A D E , C A P i TA L , A N D L A b O R F L O W S

explain this deviation: trade restrictions, real exchange rate appreciation, and political uncer-tainty. When Israel is not included in the model, however, trade in the Mashreq is found to be higher than predicted. This indicates that low levels of intraregional trade are explained by limited trade between Israel and its neighbors.

A separate Arab Monetary Fund (AMF) study (2005) focusing on intra-Arab exports for the pe-riod 1997–2003, concludes that intra-Arab exports are modest and below their potential (as estimated by the gravity model). It is suggested that Arab free trade agreements could increase exports without the risk of trade diversion if countries made a strong commitment to address defi-ciencies in Arab export capacity. The paper also notes that low intra-Arab exports arise mainly from the lack of exports between the

GCC and the Maghreb, and between Mashreq and Maghreb countries. The same conclusion applies to the EU partnership agreements. The findings of this study cannot be compared with the findings of the IMF study discussed above due to variations in country coverage and model specifications.

Export Concentration and Diversification

Jordan and Syria are among the least concen-trated countries in the MENA region with respect to export products, with a concentra-tion index of less than 0.2 (Figure 3). These countries have seen some improvement be-tween 1995 and 2007, but Lebanon (the only other Mashreq country for which information is available) has not3. Both the Mashreq and

FiGuRE 3 Concentration and Diversification indices of Export Products in MENA

Libya

Bahrain

Yemen

Saudi Arabia

Iran

Kuwait

Algeria

Oman

Qatar

UAE

Lebanon

Syria

Egypt

Tunisia

Jordan

Morocco

Libya

Bahrain

Yemen

Saudi Arabia

Iran

Kuwait

Algeria

Oman

Qatar

UAE

Lebanon

Syria

Egypt

Tunisia

Jordan

Morocco

0.0 0.20.1 0.3 0.5 0.7 0.90.4 0.6 0.8 1.00.0 0.20.1 0.3 0.5 0.7 0.90.4 0.6 0.8 1.0

1995 2007

Source: Table A2.6

7


MENA more broadly are less diversified than the world average.

The MENA region as a whole is characterized by exports of primary commodities, essentially oil and gas (86 percent); manufactured goods account for the remaining 14 percent. For the Mashreq countries, with the exception of Iraq, the reverse is true. Manufactured exports ac-count for 79 percent of total exports in Jordan, 49 percent in Lebanon, and 36 percent in Syr-ia. Tunisia and Morocco are the only two other countries doing well in terms of manufactured exports (72 and 66 percent, respectively). Table A2.5 provides detailed information on the type of export items from MENA and its subregions.

Trade in Services

Trade in services is scarcely covered in existing re-gional integration agreements in MENA. Gen-eral attitudes toward openness to the services trade vary considerably across the region. For example, the two leading countries in this re-spect, Jordan and Saudi Arabia, have signed commitments in thirty or more of fifty-five ser-vices sub-sectors covered by the WTO Gen-eral Agreement on Trade in Services, whereas other members have signed fewer than ten such agreements.

Trade in services for Mashreq countries represents an impressive share of the MENA total (20 and 32 per-cent of MENA exports and imports, respectively).4

The importance of this sector is reflected in the contribution of services trade to subregion-al GDP; in 2005, exports and imports were estimated to be 24 and 20 percent of GDP (Figure 4). The subregion is thus a net exporter of trade services—mostly tourism. Lebanon is the economy most open to the services trade, with 50 percent of exports and 37 percent of imports.

In 2005, the Mashreq as a whole exported mainly travel and information technology (IT) services, which amounted to 20 and 16 percent, respectively, of total service exports.5 Imports also are domi-nated by travel and IT services, which account for 24 percent each, followed by transportation services at 10 percent. Insurance and financial services are the least traded by the region, re-flecting the fact that the financial sector lags

FiGuRE 4 Trade in Commercial Services* (% GDP)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Jordan Syria Lebanon WBG Mashreq MENA WORLD

ImportExport

Source: GDF and WDI data 2009.*Commercial services include information technology services, insurance and financial services, transportation services, and travel/tourism services.

3 The concentration index ranges between 0 and 1, where 1 represents total concentration. The diversification index reveals the extent of the differences between the structure of trade of the country or group of countries and the world average. The index value ranges from 0 to 1.4 World Bank Global Development Finance (GDF) and World Development Indicators (WDI), September 2009.5 Statistics on trade services are captured through the following components: computer, communications and other Services (IT); insurance and financial services; transportation services; and travel/tourism services.

8


behind in most Mashreq countries, with the notable exception of Lebanon. Lebanese banks have recently opened branches in Iraq, Jordan, Egypt, Oman, Saudi Arabia, and Libya.

Constraints to Trade Integration

The factors behind the low trade performance in Mashreq countries are multi-faceted. They include the low level of complementarity of trade (arising from similar production struc-tures), poor investment climates, weak politi-cal commitment to economic integration, lack of a common vision, and ongoing conflicts in the region.6 Figures 5 and 6 illustrate the

poor enabling environment for trade in the Mashreq, first with respect to the ease of do-ing business, and second with respect to logis-tics performance. A recent World Bank study found the overall restrictiveness of services trade policies for the two Mashreq countries in the survey (Lebanon and Jordan) to be high by international standards, but slightly below the PAFTA average.7

Capital Flows

Mashreq countries have been the largest recipients of foreign direct investment (FDI) as a share of GDP in the MENA region. In 2007, FDI for the

FiGuRE 5 Ease of Doing business Ranking FiGuRE 6 Logistics Performance index

1810 12 17 16

020406080

100120140160180

Iraq Jordan Lebanon Syria WBG

World Ranking MENA Ranking0

1

2

3

4

Iraq Jordan Lebanon Syria MENA MIC

Source: Doing Business 2010, World Bank and International Finance Corporation; Global Development Finance and World Development Indicators data, World Bank, 2010.

6 A commentator at the conference on Trade and Investment Integration–Opportunities for the Arab World, organized during the Annual Meetings by the World Bank in Istanbul on October 5, 2009, observed that a serious economic integration policy that would enable the region to reap the potential growth of further trade benefits in the Mashreq would need to address a num-ber of issues. These included weak political commitment and lack of a clear vision, reduction in nontariff barriers, harmoniza-tion of regulations, establishment of common rules and standard cross-border infrastructure, liberalization of the choice of ports for imports and exports, and improvements in physical infrastructure.7 This ongoing World Bank research project (by Ingo Borchert, Samantha DeMartino, and Aaditya Mattoo) hosts data on 102 countries from across the world, 11 of which are PAFTA countries. The survey covers five key sectors: financial services (banking and insurance), telecommunications, retail distribution, transportation, and professional services. Specifically, the survey covers cross-border trade in services (mode 1 in WTO parlance) in financial, transportation and professional services; commercial pres-ence or FDI (mode 3) in each service sector; and the presence of service supplying individuals (mode 4) in professional services.

9


Mashreq countries represented 5.8 percent of GDP, followed by Maghreb countries (3.7 percent) and GCC countries (2.8 percent). Inward FDI stocks in Jordan, at nearly 102 percent of GDP, are the highest in the entire MENA region (and among developing coun-tries), followed by Lebanon (83.5 percent) and Syria (22 percent).8 The ratio in Syria is nearly half of what used to be in 2000. Over the long term, FDI flows have not been as dynamic as in other emerging economies, such as those in Eastern Europe. Financing through international capital markets still appears to be limited compared to other re-gions. While information on the sources of FDI is not available, it is likely that countries close to the Gulf region, such as Jordan and Lebanon, have received a large share of their foreign capital inflows from resource-rich MENA countries.9

Mashreq countries rely heavily on remittances. The most intense intraregional remittance corridors are those from GCC to Mashreq countries, and between Mashreq countries (essentially WBG and Jordan). In most years, remittances have exceeded capital flows and have remained the most stable source of for-eign capital in Mashreq countries. In 2007, re-mittances constituted a larger share of capital inflows in Mashreq countries than FDI and official development assistance combined and accounted for as much as 15 percent of GDP (Figure 7). Within the subregion, and compared to other MENA countries receiv-ing remittances, Mashreq countries have the highest ratio of remittances to GDP (Figure 8). In 2007, for example, remittanc-es were high and growing in Lebanon (24.4 percent of GDP), high and relatively stable in Jordan (22.7 percent of GDP), and rela-

FiGuRE 7 Remittances, FDi and ODA Countries (US$ billions)

FiGuRE 8 Remittances as Share of GDP 2007 in Mashreq Countries (US$ billions)

–2

0

4

2

6

8

10

12

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Workers’sremittances

Official developmentassistance

Foreign directinvestment

0%

5%

10%

15%

20%

25%

30%

Algeria Egypt Jordan Lebanon Morocco Syria Tunisia Yemen

Source: World Bank, World Development Indicators, 2009.

8 United Nations (2009).9 World Bank and Arab Monetary Fund (2010) states that a large majority of FDI flows in the Arab world are between Arab countries. The main investors in Arab countries are European and GCC countries, as well as a few developing Asian economies (China, India, Malaysia). See page 19.

10


tively low in the case of Syria (2.2 percent of GDP).10

Labor Mobility

Labor mobility is an important element of regional integration in the Mashreq. All of the Mashreq countries have seen extensive migration, both temporary and permanent, since the 1970s. Migrants from Mashreq countries are often skilled and more likely to be temporary mi-grants in other Arab countries. Though this group of countries primarily sends migrants to other Arab countries, it also exports workers to Western destinations such as the United States, Europe, and Australia, though in these cases migration tends to be permanent.

Migration trends vary widely between MENA sub-regions. Mashreq countries dominate regional migration. Between 1990 and 2010, the num-

ber of migrants increased by 132 percent in the Mashreq, compared to 75 percent in the GCC and 20 percent in the Maghreb (Table 1). Within the Mashreq subregion, many coun-tries serve as both origin and destination. Emi-grants typically head to GCC countries or to other Mashreq countries. In 2000, while only 27 percent of migrants to Mashreq countries originated from MENA countries, 56 percent of migrants coming from the Mashreq stayed in the region.11 Emigration farther abroad has been significant, especially from Lebanon. Jor-dan, Lebanon, and Syria import low-skilled labor from Asia and host a large number of refugees.12 The conflict in Iraq has added an-other dimension to migration in the subregion. The best available evidence suggests that, be-tween 2003 and 2009, as many as one million Iraqis could have been displaced inside Iraq; and in what is often called the Iraq Diaspora, another 1.5 million could have been displaced to other countries, namely Jordan and Syria.13

TAbLE 1 international Migrants by Development Group and Arab World Sub-regions

Number of Migrants (millions)incremental

Change (millions)Percentage

ChangeMigrants as Percentage

of Population

1990 2010 1990–2010 1990 2010

World 155.5 213.9 58.4 37.6 2.9 3.1

More developed regions 82.4 127.7 45.4 55.1 7.2 10.3

Less developed regions 73.2 86.2 13.1 17.9 1.8 1.5

Arab region of which 13.1 24.4 11.3 86.8 7.1 8.7

Maghreb 0.9 1.1 0.2 20.2 1.4 1.3

Mashreq 3.5 8.2 4.7 132.0 3.6 5.3

GCC 8.6 15.1 6.5 75.4 37.4 38.6

Source: International Migration Stock: 2008 Revision (http://esa.un.org/migration/index.asp?panel=1) and Bank staff calculation

10 See World Bank (2008), Figure 2.21.11 World Bank 2008, Table 2.6.12 Refugees represent 81 percent of total migrants in Jordan, 61 percent in Lebanon, and 44 percent in the Syrian Arab Republic. See United Nations (2006).13 World Bank (2009a).

11

Integration through Physical Infrastructure

Inefficient trade facilitation processes and procedures and, to a lesser extent,

underdeveloped transport infrastructure constrain the ability of Mashreq

countries to trade more with each other, with the region, and with the world.

According to the World Bank’s Regional Cross-Border Trade Facili-

tation and Infrastructure Study, these impediments impose greater

trade losses than formal trade tariffs or quota restrictions. While

many of the constraints are technical in nature, others such as the

lack of infrastructure require investment in new facilities and care-

fully selected locations.

Most of the Mashreq region’s external trade involves three distinct markets: Europe, the Persian Gulf, and Asia. Each presents a unique challenge, not only due to geographic location but also because of the limited modal choices available for the shipment of goods. All three markets can be served by airfreight, but at considerable cost. In addition, Asia is served by maritime routes, the Gulf primarily by road, and Europe by road and sea (Box 1).

Among the various categories of physical infrastructure, the most relevant to regional integration are those needed to facilitate the movement of goods and individuals (for example, roads, rail-ways, and ports). Other important infrastructure needs center around the exchange of services (such as pipelines, power grids, and telecommunication lines). The Mashreq countries are well connected through roads and air transport, but substantial invest-ment is needed to improve the quality of road transport. The interconnectivity of energy (through electricity grids and gas pipelines) is limited, but a number of in-vestment projects are under development. Telecommunications is relatively well ad-vanced.

Most of the 31,000 km of roads called for in the Agreement on International Roads in the Arab Mashreq are in use, but they are not always of good quality.14 Rehabilitation and upgrad-ing of certain sections of the existing network have become an imperative in many member countries.

14 World Bank (2008), p. 68.

Chapter 3

12

C H A P T E R 3 i N T E G R AT i O N T H R O u G H P H y S i C A L i N F R A S T R u C T u R E

Sixty percent of the total railway network called for in the Agreement on International Railways in the Arab Mashreq has yet to be built. Further-more, interconnection between existing rail-ways in the Maghreb and Mashreq remains dependent on the decision of the Libyan au-thorities to proceed with construction of their railway project. More importantly, large sec-tions of the existing railways in the region cannot be interconnected because of track gauge differences.

Regarding the air transport sector, Jordan and Leba-non have adopted or signed open skies policy agree-

ments. In Lebanon, foreign carriers are allowed to enjoy unrestricted use of services within their borders. A ministerial agreement for a multilateral Arab accord to liberalize air trans-port was signed by 12 countries in November 1998. The accord includes clauses on: (i) the award of air traffic rights; (ii) implementation of air traffic rights; (iii) granting of operating licenses and permits; (iv) commercial require-ments for airlines; (v) government subsidies to airlines; (vi) flight safety and civil aviation se-curity; (vii) protection of the environment and consumer interests; and (vii) consultation and dispute resolution.

bOx 1 Trade Routes and Corridors in the Mashreq

The three trade corridors that connect the Mashreq countries to each other and to the longer routes that provide links to the rest of the world are: (i) a north-south corridor that links the EU—via Turkey, Syria and Jordan—to Saudi Arabia and the Gulf States, with connecting links to Lebanon and Egypt; (ii) an east-west corridor that links the Mashreq ports of Lattakia, Tartous, Tripoli, and Beirut via Syria to Iraq; and (iii) an east-west corridor that links the same ports via Syria and Jordan to Iraq.

For trade with Europe, a complex multimodal network provides a variety of routes, most of which make some use of one or more of the above trade corridors. The choice between land and maritime routes depends on the relative importance of time, cost, and reliability for the goods being shipped.

Although all of Europe can be served by road, destination countries beyond Eastern Europe pay a cost premium relative to maritime routes that is difficult to offset through faster times or greater reliability. The premium is lower for westbound road travel, as the dominant flow is that of goods shipped from Europe to the Middle East. The potential for roll-on/roll-off services (which refers to ships that allow road vehicles to be driven on and off the vessel without the assistance of cranes) between the Eastern Mediterranean and the Adriatic could present an attractive option for connections to central Europe. This mode of transportation offers a good compromise, providing faster times than all sea routes and lower cost than all land routes.

For Mashreq shipments to and from the Gulf, the principal route remains the north-south corridor through Syria, Jordan, and Lebanon, connecting with the east-west corridor through Saudi Arabia. From Iraq to the Gulf, the main route is a north-south corridor from Baghdad through Kuwait.

Despite uncertain border crossing times, especially when entering Saudi Arabia, the road route is much faster (less than one week) for the other four Mashreq countries than the alternative maritime route (up to two weeks). The door-to-door costs, including port charges and trucking at both ends, add a great deal to the cost of the maritime route.

Source: World Bank (2010).

13

i N T E G R AT i O N T H R O u G H P H y S i C A L i N F R A S T R u C T u R E C H A P T E R 3

Most Mashreq ports have improved their perfor-mance over the last five years. The six medium-sized Mashreq ports (Lattakia, Tartous, Tripoli, Beirut, Aqaba, and Um Qasr) have seen strong growth in container traffic and improved pro-ductivity over the last decade, but all of them are “feeder ports” that cover only the trans-shipment of goods to larger hub ports.

Lebanon and Syria interconnected their power grids through a 66kV transmission line in 1973. A 230kV transmission line was subsequently added to increase power exchange between the two countries, although energy trade on the first power line did not exceed 53 percent of the designed capacity (150 MW). Similarly, Jordan and Syria installed 66kV and 230kV transmission lines across their common bor-der. Both lines were utilized to back up either of the two systems in case of network outages. There are power links between Iraq, Syria, and Turkey, but the system is not synchronized.

The Euro-Arab Mashreq Gas Pipeline project is the most important cross-border gas pipeline project. Its aim is to help integrate the gas markets of Egypt, Jordan, Lebanon, and Syria with a view to creating a regional internal gas market to be integrated with the EU internal gas market. Egypt has ready-to-export gas of 1,651 bcm,

out of 1,850 bcm in proven reserves. There are important gas pipeline projects under con-sideration in the rest of the region as well, in-cluding: (i) the Iraq Gas Pipeline, which aims to export Iraq’s natural gas to Turkey through Syria, and will connect Iraq to the Arab gas pipeline as a backup for Egypt and Syria gas exports; and (ii) the Iraq-Kuwait Gas Pipeline, which will enable the export of 35mcf/d from Iraq to Kuwait after rehabilitating the existing pipelines.

Significant progress has been made on investment and regional connectivity in the telecommunications sector, thanks to privatization and liberalization policies adopted by many countries in the MENA region. Kuwait exported US$ 3.4 billion in tele-communications services in 2006, connecting an estimated 27 million mobile subscribers in MENA. Egypt’s Orascom connected 50 mil-lion subscribers, many in regional markets including Tunisia and Algeria. Qatar Telecom owns operators in Kuwait, Iraq, Algeria, Tu-nisia, Saudi Arabia, and WBG. This thriv-ing source of both regional FDI and services trade provides a model for integration in other sectors. It has also led to the emergence of a regional institution that promotes common regulatory and technical standards, the Arab Network for Regulators.

14

The overall trade levels of Mashreq countries are significantly lower as a share

of GDP than those in the MENA region more broadly. Once adjusted for

oil, however, nonoil trade in the Mashreq is only marginally lower

than in MENA. Apart from Iraq, Mashreq countries trade the most

within the MENA region. Nevertheless, Mashreq countries trade

more with EU countries than they do among themselves and within

MENA. In the service sector, the Mashreq accounts for a significant

share of regional exports and imports.

Conclusion

With the exception of Iraq, a major oil export-er, the Mashreq countries export a relatively large share of manufactured goods—surpassed only by Tunisia and Morocco. Furthermore, Mashreq exports are relatively less con-centrated than other MENA countries, with the exception of Tunisia and Mo-rocco. Overall, the Mashreq, like other subregions in MENA, has yet to take full advantage of regional economic agree-ments.

Opportunities for trade between the Mashreq and other countries in the region and else-where would be enhanced through better trade facilitation procedures and better trans-port infrastructure. While good progress

has been made under PAFTA on the re-moval of intra-regional trade tariffs and in improving customs clearance proce-dures, more remains to be done on in-frastructure, especially in the areas most relevant to regional integration (roads, railways, and ports).

Mashreq countries are well connected through roads and air transport, but substantial in-vestment is needed to improve the quality of road transport. The interconnectivity of energy (electricity grids and gas pipe-lines) is limited, though a number of investment projects are in the pipeline. Telecommunications, on the other hand, is relatively well advanced.

15

Bolbol, Ali A. and Ayten M. Fatheldin. 2005. “Intra-Arab Exports and Direct Invest-ment: An Empirical Analysis.” AMF Economic Papers, No. 12. Abu Dhabi.

Cieslik, Andrzej and Jan Hagemerjer. 2007. Assessing the impact of the EU-sponsored trade liberalization in the MENA countries.

Hadad-Zervos, Faris. 2009. “Economic Integration in the Mashreq.” December (Draft).

Hoekam, Bernard and Zarrouk J. 2009. Changes in Cross-Border Trade Costs in the Pan-Arab Free Trade Area, 2001–2008. WPS5031.

Kirchner, Emil. 2006. The European Union as a Model for Regional Integration: The Muslim World and Beyond. Jean Monnet/Robert Schuman Paper Series, Vol. 6, No.1.

Lee, Yu-Feng L. and Abdelaziz Gohar. 2009. “Trade and Intra-Regional Integration: Is Arab Region a Potential Candidate for Economic Union?” International Trade and Finance Association, 19th International Conference Working Paper, Paper 12. http://services.bepress.com/ itfa/19th/art12.

Pigato, Miria. 2009.”Strengthening MENA’s Trade and Investments Links with Chi-na and India”. Orientation in Development Series. The World Bank.

Rodolphe, Blavy. 2001. Trade in the Mashreq: An Empirical Examination. IMF Working Paper WB/01/163.

Romagnoli, Alessandro and Luisa Mengoni. 2008. The Challenge of economic integration in the MENA region: from GAFTA and EU-MFTA to small scale Arab Unions. Springer Science + Business Media, LLC (online), University of Bologna, Strada Maggiore.

United Nations. 2007. Annual Review of Developments in Globalization and Regional Inte-gration in the Arab Countries. Economic and Social Commission for Western Asia (ESCWA).

World Bank. 2010. “Regional Cross-Border Trade Facilitation and Infrastructure Study for Mashreq Countries.” Draft.

World Bank. 2009a. “Regional Economic Integration in the Arab World: Rational and a Role for the World Bank Group.” October (Draft).

World Bank. 2009b. “Trade Reforms and Export Diversification in Syria.” June.World Bank. 2008a. “MENA Economic Developments and Prospects: Regional Inte-

gration for Global Competitiveness.”

References

17

Trade Agreements in the MENA Region

United States EFTA European Union Turkey

Iran

IraqWBG

GAFTA

Sudan

Djibouti

Mauritania

Singapore

Regional Agreements

Bilateral Agreements

MENA

Afghanistan,Azerbaijan,Kazakhstan,Kyrgyz Republic,Pakistan,Tajikistan,Turkmenistan,Uzbekistan

Burundi, Comoros,D. R. Congo, Eritrea,Ethiopia, Kenya,Madagascar, Malawi,Mauritus, Rwanda,Seychelles, Sudan,Swaziland, Uganda,Zambia, ZimbabweAMU: Arab Maghreb Union (5)

GCC: Gulf Cooperation Council (6)GAFTA: Great Arab Free Trade Agreement (18)ECO: Economic Cooperation Organization (10)COMESA: Common Market for Eastern and Southern Africa (19)EFTA: European Free Trade Association (4), includes Iceland, Switzerland, Norway, and LiechtensteinAgadir: Agadir Agreement for the Establishment of a Free Trade Zone between Arabic Mediterranean Nations (4)

ECOGCC

Agadir

COMESA

AMU

Libya

Bahrain

Yemen

Saudi Arabia

Kuwait

AlgeriaOman

Qatar

Lebanon

Syria

EgyptTunisia Jordan

Morocco

Source: World Bank. 2008. MENA Economic Developments and Prospects.

Annex 1

18

Statistical TablesAnnex 2

TAbLE A2.1 MENA Total Trade, 2007 (uS$ millions)

TOTAL TRADE WiTH THE WORLD TOTAL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS

Total Exports (in uS$ million)

Total imports (in uS$ million) Total Trade




Total imports (in uS$ million)

Total Trade within each Sub-Region (in uS$ million)

MENA Region 752,054 482,435 1,234,489 65,314 57,107 122,421

By geographic sub-region

GCC Countries 458,055 279,455 737,509 49,015 26,076 75,091 26,559 19,516 46,076

Bahrain 6,878 11,511 18,389 1,465 1,106 2,571 1,189 1,012 2,201

Kuwait 57,799 21,248 79,047 1,811 3,150 4,961 1,186 2,244 3,430

Oman 22,137 15,952 38,088 3,989 5,020 9,009 3,341 4,748 8,089

Qatar 40,586 23,388 63,974 2,247 3,682 5,929 2,015 3,283 5,298

Saudi Arabia 220,359 89,540 309,899 21,245 6,889 28,134 13,046 3,786 16,832

United Arab Emirats 110,296 117,816 228,112 18,259 6,228 24,487 5,783 4,443 10,225

Maghreb 132,697 78,324 211,020 3,981 7,644 11,626 2,808 3,142 5,950

Algeria 54,859 27,629 82,488 1,239 927 2,166 709 280 988

Libya 45,674 11,561 57,234 744 749 1,494 744 749 1,494

Morocco 17,188 31,624 48,812 568 4,328 4,896 198 1,091 1,288

Tunisia 14,976 19,071 34,046 1,431 1,639 3,070 1,157 1,022 2,179

(Mauritania)* 1,316 1,430 2,746

Mashreq 50,562 43,192 93,754 4,444 14,531 18,975 1,380 1,380 2,760

Iraq 36,302 10,437 46,739 288 1,976 2,264 233 233

Jordan 4,437 13,406 17,843 1,285 4,708 5,993 276 510 787

Lebanon 2,642 11,990 14,632 1,197 1,731 2,928 274 281 556

Occ.Pal.Terr 64 3,141 3,206 40 2,386 2,427 31 45 76

Syrian Arab Republic 7,117 14,655 21,772 1,635 3,729 5,364 565 543 1,109

Other 110,741 81,465 192,206 7,873 8,857 16,730 194 162 356

Egypt 24,344 26,927 51,271 4,671 4,752 9,423 135 49 183

Djibouti 202 2,051 2,253 148 715 863 7 28 35

Iran 79,407 43,985 123,392 2,807 1,236 4,042 29 9 39

Yemen 6,788 8,502 15,290 247 2,154 2,401 23 77 99

Source: World Trade Integrated Solution.*Mauritania is not part of the aggregates.

19

S TAT i S T i C A L TA b L E S A N N E x 2

TAbLE A2.1 MENA Total Trade, 2007 (uS$ millions)







Total imports (in uS$ million)

Total Trade within each Sub-Region (in uS$ million)

MENA Region 752,054 482,435 1,234,489 65,314 57,107 122,421


GCC Countries 458,055 279,455 737,509 49,015 26,076 75,091 26,559 19,516 46,076

Bahrain 6,878 11,511 18,389 1,465 1,106 2,571 1,189 1,012 2,201

Kuwait 57,799 21,248 79,047 1,811 3,150 4,961 1,186 2,244 3,430

Oman 22,137 15,952 38,088 3,989 5,020 9,009 3,341 4,748 8,089

Qatar 40,586 23,388 63,974 2,247 3,682 5,929 2,015 3,283 5,298

Saudi Arabia 220,359 89,540 309,899 21,245 6,889 28,134 13,046 3,786 16,832


Maghreb 132,697 78,324 211,020 3,981 7,644 11,626 2,808 3,142 5,950

Algeria 54,859 27,629 82,488 1,239 927 2,166 709 280 988

Libya 45,674 11,561 57,234 744 749 1,494 744 749 1,494

Morocco 17,188 31,624 48,812 568 4,328 4,896 198 1,091 1,288

Tunisia 14,976 19,071 34,046 1,431 1,639 3,070 1,157 1,022 2,179

(Mauritania)* 1,316 1,430 2,746

Mashreq 50,562 43,192 93,754 4,444 14,531 18,975 1,380 1,380 2,760

Iraq 36,302 10,437 46,739 288 1,976 2,264 233 233

Jordan 4,437 13,406 17,843 1,285 4,708 5,993 276 510 787

Lebanon 2,642 11,990 14,632 1,197 1,731 2,928 274 281 556

Occ.Pal.Terr 64 3,141 3,206 40 2,386 2,427 31 45 76

Syrian Arab Republic 7,117 14,655 21,772 1,635 3,729 5,364 565 543 1,109

Other 110,741 81,465 192,206 7,873 8,857 16,730 194 162 356

Egypt 24,344 26,927 51,271 4,671 4,752 9,423 135 49 183

Djibouti 202 2,051 2,253 148 715 863 7 28 35

Iran 79,407 43,985 123,392 2,807 1,236 4,042 29 9 39

Yemen 6,788 8,502 15,290 247 2,154 2,401 23 77 99

20

A N N E x 2 S TAT i S T i C A L TA b L E S

TAbLE A2.2 MENA Total Trade, 2007 (% GDP)


Total Exports (% GDP) Total imports (% GDP) Total Trade (% GDP)Total Exports

(% GDP)Total imports

(% GDP)Total Trade (% GDP)

Total Exports (% GDP)

Total imports (% GDP)

Total Trade (% GDP)

MENA Region 46.5 29.8 76.3 4.0 3.5 7.6


GCC Countries 57.7 35.2 92.9 6.2 3.3 9.5 3.3 2.5 5.8

Bahrain 62.5 104.6 167.2 13.3 10.1 23.4 10.8 9.2 20.0

Kuwait 52.5 19.3 71.9 1.6 2.9 4.5 1.1 2.0 3.1

Oman 55.3 39.9 95.2 10.0 12.6 22.5 8.4 11.9 20.2

Qatar 57.2 32.9 90.1 3.2 5.2 8.4 2.8 4.6 7.5

Saudi Arabia 57.7 23.4 81.1 5.6 1.8 7.4 3.4 1.0 4.4

United Arab Emirats 61.3 65.5 126.7 10.1 3.5 13.6 3.2 2.5 5.7

Maghreb 42.3 24.9 67.2 1.3 2.4 3.7 0.9 1.0 1.9

Algeria 40.9 20.6 61.6 0.9 0.7 1.6 0.5 0.2 0.7

Libya 65.2 16.5 81.8 1.1 1.1 2.1 1.1 — —

Morocco 22.9 42.2 65.1 0.8 5.8 6.5 0.3 1.5 1.7

Tunisia 42.8 54.5 97.3 4.1 4.7 8.8 3.3 2.9 6.2

(Mauritania)* 49.8 54.1 103.9

Mashreq 35.6 30.4 66.0 3.1 10.2 13.4 1.0 1.0 1.9

Iraq 58.6 16.8 75.4 0.5 3.2 3.7 0.4 — —

Jordan 27.7 83.8 111.5 8.0 29.4 37.5 1.7 3.2 4.9

Lebanon 10.6 48.0 58.5 4.8 6.9 11.7 1.1 1.1 2.2

Occ.Pal.Terr — — — — — — — — —

Syrian Arab Republic 18.2 37.6 55.8 4.2 9.6 13.8 1.4 1.4 2.8

Other 30.1 22.1 52.3 2.1 2.4 4.5 0.1 0.0 0.1

Egypt 18.4 20.4 38.8 3.5 3.6 7.1 0.1 0.0 0.1

Djibouti 25.2 256.4 281.6 18.5 89.4 107.9 0.9 3.4 4.4

Iran, Islamic Republic of 36.8 20.4 57.1 1.3 0.6 1.9 0.0 0.0 0.0

Yemen 35.7 44.7 80.5 1.3 11.3 12.6 0.1 0.4 0.5

Source: Table A2.1.*Mauritania is not part of the aggregates.

21


TAbLE A2.2 MENA Total Trade, 2007 (% GDP)


Total Exports (% GDP) Total imports (% GDP) Total Trade (% GDP)Total Exports

(% GDP)Total imports

(% GDP)Total Trade (% GDP)

Total Exports (% GDP)

Total imports (% GDP)

Total Trade (% GDP)

MENA Region 46.5 29.8 76.3 4.0 3.5 7.6


GCC Countries 57.7 35.2 92.9 6.2 3.3 9.5 3.3 2.5 5.8

Bahrain 62.5 104.6 167.2 13.3 10.1 23.4 10.8 9.2 20.0

Kuwait 52.5 19.3 71.9 1.6 2.9 4.5 1.1 2.0 3.1

Oman 55.3 39.9 95.2 10.0 12.6 22.5 8.4 11.9 20.2

Qatar 57.2 32.9 90.1 3.2 5.2 8.4 2.8 4.6 7.5

Saudi Arabia 57.7 23.4 81.1 5.6 1.8 7.4 3.4 1.0 4.4


Maghreb 42.3 24.9 67.2 1.3 2.4 3.7 0.9 1.0 1.9

Algeria 40.9 20.6 61.6 0.9 0.7 1.6 0.5 0.2 0.7

Libya 65.2 16.5 81.8 1.1 1.1 2.1 1.1 — —

Morocco 22.9 42.2 65.1 0.8 5.8 6.5 0.3 1.5 1.7

Tunisia 42.8 54.5 97.3 4.1 4.7 8.8 3.3 2.9 6.2

(Mauritania)* 49.8 54.1 103.9

Mashreq 35.6 30.4 66.0 3.1 10.2 13.4 1.0 1.0 1.9

Iraq 58.6 16.8 75.4 0.5 3.2 3.7 0.4 — —

Jordan 27.7 83.8 111.5 8.0 29.4 37.5 1.7 3.2 4.9

Lebanon 10.6 48.0 58.5 4.8 6.9 11.7 1.1 1.1 2.2

Occ.Pal.Terr — — — — — — — — —


Other 30.1 22.1 52.3 2.1 2.4 4.5 0.1 0.0 0.1

Egypt 18.4 20.4 38.8 3.5 3.6 7.1 0.1 0.0 0.1

Djibouti 25.2 256.4 281.6 18.5 89.4 107.9 0.9 3.4 4.4

Iran, Islamic Republic of 36.8 20.4 57.1 1.3 0.6 1.9 0.0 0.0 0.0

Yemen 35.7 44.7 80.5 1.3 11.3 12.6 0.1 0.4 0.5


22


TAbLE A2.3 MENA Non-Oil Trade, 2007 (uS$ millions)

TOTAL NON-FuEL TRADE WiTH THE WORLD TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL NON-FuEL TRADE WiTHiN Sub-REGiONS

Total Non-Fuel Exports (in uS$ million)

Total Non-Fuel imports (in uS$ million)

Total Non-Fuel Trade (in uS$ million)

Total Non-Fuel Exports

(in uS$ million)

Total Non-Fuel imports

(in uS$ million)

Total Non-Fuel Trade

(in uS$ million)Total Exports

(in uS$ million)Total imports

(in uS$ million)Total Trade

(in uS$ million)

MENA Region 142,436 453,725 596,161 52,960 38,217 91,177


GCC Countries 71,811 271,369 343,180 40,124 24,904 65,028 21,182 18,514 39,696

Bahrain 4,279 5,524 9,802 1,457 1,064 2,521 1,181 973 2,154

Kuwait 2,778 21,126 23,904 1,801 3,066 4,868 1,179 2,161 3,340

Oman 2,169 15,391 17,560 3,444 4,617 8,061 2,800 4,345 7,144

Qatar 3,993 23,263 27,255 1,215 3,576 4,791 1,001 3,178 4,179

Saudi Arabia 29,912 89,316 119,228 14,166 6,834 21,000 9,320 3,743 13,064


Maghreb 33,422 69,211 102,633 2,276 3,776 6,051 1,516 1,660 3,176

Algeria 2,478 27,319 29,797 211 909 1,121 177 278 455

Libya 1,548 1,210 2,758 117 741 858 — 830 —

Morocco 16,736 25,274 42,009 562 1,476 2,038 192 391 584

Tunisia 12,661 16,618 29,279 1,385 650 2,035 1,146 161 1,307

(Mauritania)* 977 994 1,971

Mashreq 10,456 31,620 42,076 4,207 6,615 10,822 1,158 1,158 2,317

Iraq 664 215 879 66 22 88 16 — —

Jordan 4,397 10,460 14,857 1,284 2,003 3,286 276 500 776

Lebanon 2,636 9,372 12,008 1,191 1,251 2,442 274 279 553

Occ.Pal.Terr 64 1,917 1,981 40 1,167 1,207 30 44 75

Syrian Arab Republic 2,695 9,870 12,565 1,627 2,172 3,799 562 335 896

Other 26,748 81,524 108,272 6,352 2,923 9,276 162.15 74.59 237

Egypt 14,339 22,953 37,292 4,164 1,210 5,374 135 — 135

Djibouti 175 782 957 148 591 738 — 27 27

Iran, Islamic Republic of 11,814 3,682 15,495 1,841 237 2,078 28 — 28

Yemen 420 6,678 7,098 200 885 1,085 — 47 47


23


TAbLE A2.3 MENA Non-Oil Trade, 2007 (uS$ millions)

TOTAL NON-FuEL TRADE WiTH THE WORLD TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL NON-FuEL TRADE WiTHiN Sub-REGiONS

Total Non-Fuel Exports (in uS$ million)

Total Non-Fuel imports (in uS$ million)

Total Non-Fuel Trade (in uS$ million)

Total Non-Fuel Exports

(in uS$ million)

Total Non-Fuel imports

(in uS$ million)

Total Non-Fuel Trade

(in uS$ million)Total Exports

(in uS$ million)Total imports

(in uS$ million)Total Trade

(in uS$ million)

MENA Region 142,436 453,725 596,161 52,960 38,217 91,177


GCC Countries 71,811 271,369 343,180 40,124 24,904 65,028 21,182 18,514 39,696

Bahrain 4,279 5,524 9,802 1,457 1,064 2,521 1,181 973 2,154

Kuwait 2,778 21,126 23,904 1,801 3,066 4,868 1,179 2,161 3,340

Oman 2,169 15,391 17,560 3,444 4,617 8,061 2,800 4,345 7,144

Qatar 3,993 23,263 27,255 1,215 3,576 4,791 1,001 3,178 4,179

Saudi Arabia 29,912 89,316 119,228 14,166 6,834 21,000 9,320 3,743 13,064


Maghreb 33,422 69,211 102,633 2,276 3,776 6,051 1,516 1,660 3,176

Algeria 2,478 27,319 29,797 211 909 1,121 177 278 455

Libya 1,548 1,210 2,758 117 741 858 — 830 —

Morocco 16,736 25,274 42,009 562 1,476 2,038 192 391 584

Tunisia 12,661 16,618 29,279 1,385 650 2,035 1,146 161 1,307

(Mauritania)* 977 994 1,971

Mashreq 10,456 31,620 42,076 4,207 6,615 10,822 1,158 1,158 2,317

Iraq 664 215 879 66 22 88 16 — —

Jordan 4,397 10,460 14,857 1,284 2,003 3,286 276 500 776

Lebanon 2,636 9,372 12,008 1,191 1,251 2,442 274 279 553

Occ.Pal.Terr 64 1,917 1,981 40 1,167 1,207 30 44 75

Syrian Arab Republic 2,695 9,870 12,565 1,627 2,172 3,799 562 335 896

Other 26,748 81,524 108,272 6,352 2,923 9,276 162.15 74.59 237

Egypt 14,339 22,953 37,292 4,164 1,210 5,374 135 — 135

Djibouti 175 782 957 148 591 738 — 27 27

Iran, Islamic Republic of 11,814 3,682 15,495 1,841 237 2,078 28 — 28

Yemen 420 6,678 7,098 200 885 1,085 — 47 47


24


TAbLE A2.4 MENA Non-Oil Trade, 2007 (% GDP)

TOTAL NON-FuEL TRADE WiTH THE WORLD TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS

Total Non-Fuel Exports (% GDP)

Total Non-Fuel imports (% GDP)

Total Non-Fuel Trade (% GDP)







MENA Region 8.81 28.06 36.87 3.28 2.36 5.64 — — —


GCC Countries 9.04 34.18 43.22 5.05 3.14 8.19 2.67 2.33 5.00

Bahrain 38.90 50.22 89.11 13.24 9.67 22.92 10.73 8.85 19.58

Kuwait 2.53 19.21 21.73 1.64 2.79 4.43 1.07 1.96 3.04

Oman 5.42 38.48 43.90 8.61 11.54 20.15 7.00 10.86 17.86

Qatar 5.62 32.76 38.39 1.71 5.04 6.75 1.41 4.48 5.89

Saudi Arabia 7.83 23.38 31.21 3.71 1.79 5.50 2.44 0.98 3.42


Maghreb 10.64 22.04 32.69 0.72 1.20 1.93 0.48 0.53 1.01

Algeria 1.85 20.39 22.24 0.16 0.68 0.84 0.13 0.21 0.34

Libya 2.21 1.73 3.94 0.17 1.06 1.23

Morocco 22.31 33.70 56.01 0.75 1.97 2.72 0.26 0.52 0.78

Tunisia 36.17 47.48 83.65 3.96 1.86 5.81 3.27 0.46 3.73

(Mauritania)* 36.97 37.61 74.58

Mashreq 7.36 22.27 29.63 2.96 4.66 7.62 0.82 0.82 1.63

Iraq 1.07 0.35 1.42 0.11 0.04 0.14 0.03

Jordan 27.48 65.38 92.86 8.02 12.52 20.54 1.72 3.13 4.85

Lebanon 10.54 37.49 48.03 4.76 5.01 9.77 1.10 1.12 2.21

Occ.Pal.Terr — — — — — — — — —


Other 7.27 22.17 29.44 1.73 0.79 2.52 0.04 0.02 0.06

Egypt 10.86 17.39 28.25 3.15 0.92 4.07 0.10 — 0.10

Djibouti 21.84 97.80 119.64 18.45 73.84 92.29 — 3.42 3.42

Iran, Islamic Republic of 5.47 1.70 7.17 0.85 0.11 0.96 0.01 — 0.01

Yemen 2.21 35.14 37.36 1.05 4.66 5.71 — 0.25 0.25


25


TAbLE A2.4 MENA Non-Oil Trade, 2007 (% GDP)

TOTAL NON-FuEL TRADE WiTH THE WORLD TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS










MENA Region 8.81 28.06 36.87 3.28 2.36 5.64 — — —


GCC Countries 9.04 34.18 43.22 5.05 3.14 8.19 2.67 2.33 5.00

Bahrain 38.90 50.22 89.11 13.24 9.67 22.92 10.73 8.85 19.58

Kuwait 2.53 19.21 21.73 1.64 2.79 4.43 1.07 1.96 3.04

Oman 5.42 38.48 43.90 8.61 11.54 20.15 7.00 10.86 17.86

Qatar 5.62 32.76 38.39 1.71 5.04 6.75 1.41 4.48 5.89

Saudi Arabia 7.83 23.38 31.21 3.71 1.79 5.50 2.44 0.98 3.42


Maghreb 10.64 22.04 32.69 0.72 1.20 1.93 0.48 0.53 1.01

Algeria 1.85 20.39 22.24 0.16 0.68 0.84 0.13 0.21 0.34

Libya 2.21 1.73 3.94 0.17 1.06 1.23

Morocco 22.31 33.70 56.01 0.75 1.97 2.72 0.26 0.52 0.78

Tunisia 36.17 47.48 83.65 3.96 1.86 5.81 3.27 0.46 3.73

(Mauritania)* 36.97 37.61 74.58

Mashreq 7.36 22.27 29.63 2.96 4.66 7.62 0.82 0.82 1.63

Iraq 1.07 0.35 1.42 0.11 0.04 0.14 0.03

Jordan 27.48 65.38 92.86 8.02 12.52 20.54 1.72 3.13 4.85

Lebanon 10.54 37.49 48.03 4.76 5.01 9.77 1.10 1.12 2.21

Occ.Pal.Terr — — — — — — — — —


Other 7.27 22.17 29.44 1.73 0.79 2.52 0.04 0.02 0.06

Egypt 10.86 17.39 28.25 3.15 0.92 4.07 0.10 — 0.10

Djibouti 21.84 97.80 119.64 18.45 73.84 92.29 — 3.42 3.42

Iran, Islamic Republic of 5.47 1.70 7.17 0.85 0.11 0.96 0.01 — 0.01

Yemen 2.21 35.14 37.36 1.05 4.66 5.71 — 0.25 0.25


26


TAbLE A2.5 A MENA Exports by Products, as % of total Exports of Products, 2007

Table 3 as % of total exports of products

Primary commodities

(SiTC 0 + 1 + 2 + 3 + 4 + 68 +

667+ 971)

Primary commodities,

excluding fuels (SiTC 0 + 1 + 2 + 4 + 68 + 667 + 971)

All food items (SiTC 0 + 1 +

22 + 4)

Food, basic (SiTC 0 + 22 + 4)

Food, basic excluding tea,

coffee, cocoa and spices (SiTC 0 + 22 + 4 less 07)

beverages and tobacco

(SiTC 1)

Agricultural raw materials (SiTC

2 less 22, 27 and 28)

Ores, metals, precious stones

and non-monetary gold

(SiTC 27 + 28 + 68 + 667 + 971)

Ores and metals (SiTC 27 + 28 + 68)

Non-ferrous metals

(SiTC 68)

Other ores and metals

(SiTC 27 + 28)

Pearls, precious stones and non-monetary gold (SiTC 667 +

971) Fuels (SiTC 3)

MENA 86.3 5.5 2.4 2.3 2.1 0.2 0.2 2.9 1.6 0.9 0.7 1.3 80.7

GCC 87.4 4.5 1.1 1.0 0.9 0.1 0.1 3.3 1.4 0.9 0.4 1.9 82.8

Bahrain 90.2 11.1 0.5 0.4 0.4 0.1 0.0 10.6 10.6 9.0 1.6 0.0 79.1

Kuwait 94.9 0.5 0.2 0.2 0.2 0.0 0.1 0.2 0.2 0.0 0.2 0.0 94.4

Oman 90.4 3.6 2.4 2.2 2.2 0.2 0.0 1.2 1.2 0.6 0.6 0.0 86.8

Qatar 90.3 0.2 0.1 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.1 0.0 90.1

Saudi Arabia 89.4 1.3 0.9 0.8 0.8 0.1 0.1 0.4 0.3 0.1 0.2 0.1 88.1

UAE 77.5 13.7 2.2 1.9 1.7 0.3 0.3 11.2 3.4 2.5 0.9 7.8 63.8

Maghreb 81.9 5.7 3.6 3.5 3.5 0.1 0.3 1.8 1.8 0.4 1.4 0.0 76.2

Algeria 99.1 0.7 0.2 0.1 0.1 0.0 0.0 0.5 0.5 0.1 0.4 0.0 98.4

Libya 96.9 0.4 0.1 0.1 0.1 0.0 0.0 0.3 0.2 0.0 0.2 0.1 96.5

Morocco 34.9 31.0 19.1 18.9 18.6 0.1 1.5 10.4 10.3 2.2 8.2 0.1 3.8

Tunisia 28.3 11.7 9.8 9.2 8.9 0.6 0.5 1.4 1.4 0.4 1.0 0.0 16.6

Mauritania * 94.6 69.6 12.9 12.9 12.9 — 0.0 56.7 53.9 — 53.9 2.8 25.0

Mashreq 84.0 8.3 5.9 5.4 4.9 0.5 0.3 2.1 1.4 0.3 1.1 0.7 75.7

Iraq 99.7 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 99.6

Jordan 20.8 20.1 13.1 11.4 11.1 1.7 0.3 6.7 5.9 0.9 5.0 0.8 0.7

Lebanon 51.5 51.2 16.1 12.7 11.3 3.4 1.0 34.1 17.2 3.2 14.0 16.9 0.3

Syria 64.9 23.4 21.0 20.0 17.9 1.0 1.2 1.2 1.2 0.7 0.5 41.5

Other 87.5 9.0 5.8 5.6 5.2 0.2 0.6 2.6 2.5 1.5 1.0 0.1 78.5

Egypt 77.8 15.4 9.4 9.4 9.2 0.0 1.9 4.0 3.3 1.7 1.6 0.7 62.4

Djibouti 95.1 81.8 73.3 73.3 71.5 0.0 2.8 5.7 2.1 0.3 1.8 3.6 13.2

Iran 88.6 8.0 5.0 4.8 4.4 0.2 0.4 2.5 2.5 1.6 0.9 0.0 80.6

Yemen 96.7 6.2 5.3 4.8 4.5 0.4 0.2 0.8 0.3 0.1 0.2 0.5 90.5

Source: UNCTAD, Statistical Report 2009*Mauritania is not part of the aggregates.

27


TAbLE A2.5 A MENA Exports by Products, as % of total Exports of Products, 2007


Primary commodities

(SiTC 0 + 1 + 2 + 3 + 4 + 68 +

667+ 971)

Primary commodities,

excluding fuels (SiTC 0 + 1 + 2 + 4 + 68 + 667 + 971)

All food items (SiTC 0 + 1 +

22 + 4)

Food, basic (SiTC 0 + 22 + 4)

Food, basic excluding tea,

coffee, cocoa and spices (SiTC 0 + 22 + 4 less 07)

beverages and tobacco

(SiTC 1)

Agricultural raw materials (SiTC

2 less 22, 27 and 28)

Ores, metals, precious stones

and non-monetary gold

(SiTC 27 + 28 + 68 + 667 + 971)

Ores and metals (SiTC 27 + 28 + 68)

Non-ferrous metals

(SiTC 68)

Other ores and metals

(SiTC 27 + 28)

Pearls, precious stones and non-monetary gold (SiTC 667 +

971) Fuels (SiTC 3)

MENA 86.3 5.5 2.4 2.3 2.1 0.2 0.2 2.9 1.6 0.9 0.7 1.3 80.7

GCC 87.4 4.5 1.1 1.0 0.9 0.1 0.1 3.3 1.4 0.9 0.4 1.9 82.8

Bahrain 90.2 11.1 0.5 0.4 0.4 0.1 0.0 10.6 10.6 9.0 1.6 0.0 79.1

Kuwait 94.9 0.5 0.2 0.2 0.2 0.0 0.1 0.2 0.2 0.0 0.2 0.0 94.4

Oman 90.4 3.6 2.4 2.2 2.2 0.2 0.0 1.2 1.2 0.6 0.6 0.0 86.8

Qatar 90.3 0.2 0.1 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.1 0.0 90.1

Saudi Arabia 89.4 1.3 0.9 0.8 0.8 0.1 0.1 0.4 0.3 0.1 0.2 0.1 88.1

UAE 77.5 13.7 2.2 1.9 1.7 0.3 0.3 11.2 3.4 2.5 0.9 7.8 63.8

Maghreb 81.9 5.7 3.6 3.5 3.5 0.1 0.3 1.8 1.8 0.4 1.4 0.0 76.2

Algeria 99.1 0.7 0.2 0.1 0.1 0.0 0.0 0.5 0.5 0.1 0.4 0.0 98.4

Libya 96.9 0.4 0.1 0.1 0.1 0.0 0.0 0.3 0.2 0.0 0.2 0.1 96.5

Morocco 34.9 31.0 19.1 18.9 18.6 0.1 1.5 10.4 10.3 2.2 8.2 0.1 3.8

Tunisia 28.3 11.7 9.8 9.2 8.9 0.6 0.5 1.4 1.4 0.4 1.0 0.0 16.6

Mauritania * 94.6 69.6 12.9 12.9 12.9 — 0.0 56.7 53.9 — 53.9 2.8 25.0

Mashreq 84.0 8.3 5.9 5.4 4.9 0.5 0.3 2.1 1.4 0.3 1.1 0.7 75.7

Iraq 99.7 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 99.6

Jordan 20.8 20.1 13.1 11.4 11.1 1.7 0.3 6.7 5.9 0.9 5.0 0.8 0.7

Lebanon 51.5 51.2 16.1 12.7 11.3 3.4 1.0 34.1 17.2 3.2 14.0 16.9 0.3

Syria 64.9 23.4 21.0 20.0 17.9 1.0 1.2 1.2 1.2 0.7 0.5 41.5

Other 87.5 9.0 5.8 5.6 5.2 0.2 0.6 2.6 2.5 1.5 1.0 0.1 78.5

Egypt 77.8 15.4 9.4 9.4 9.2 0.0 1.9 4.0 3.3 1.7 1.6 0.7 62.4

Djibouti 95.1 81.8 73.3 73.3 71.5 0.0 2.8 5.7 2.1 0.3 1.8 3.6 13.2

Iran 88.6 8.0 5.0 4.8 4.4 0.2 0.4 2.5 2.5 1.6 0.9 0.0 80.6

Yemen 96.7 6.2 5.3 4.8 4.5 0.4 0.2 0.8 0.3 0.1 0.2 0.5 90.5

Source: UNCTAD, Statistical Report 2009*Mauritania is not part of the aggregates.

28


TAbLE A2.5 b MENA Exports by Products, as % of total Exports of Products, 2007


Manufactured goods (SiTC 5 to 8 less 667 and 68)

Chemical products (SiTC 5)

Machinery and transport

equipment (SiTC 7)

Other manufactured goods (SiTC 6 + 8 less 667 and 68)

iron and steel (SiTC 67)

MENA 13.7 4.3 4.0 5.5 0.7

GCC 12.6 4.6 4.5 3.6 0.5

Bahrain 9.8 4.5 1.9 3.4 0.1

Kuwait 5.1 2.6 1.7 0.7 0.0

Oman 9.6 3.3 3.5 2.8 0.6

Qatar 9.7 7.7 1.0 0.9 0.7

Saudi Arabia 10.6 6.1 2.4 2.1 0.5

UAE 22.5 2.0 11.4 9.0 0.5

Maghreb 18.1 3.7 4.5 9.9 0.8

Algeria 0.9 0.5 0.0 0.4 0.3

Libya 3.1 1.9 0.1 1.2 1.1

Morocco 65.1 14.8 16.7 33.7 1.4

Tunisia 71.7 9.7 19.7 42.3 1.4

Mauritania * 0.0 — — 0.0 —

Mashreq 16.0 4.0 2.9 9.1 0.2

Iraq 0.3 0.0 0.2 0.0

Jordan 79.2 26.4 17.7 35.1 1.2

Lebanon 48.5 13.1 4.7 30.7 1.1

Syria 35.1 5.4 5.0 24.8 0.3

Other 12.5 3.6 1.2 7.7 2.7

Egypt 22.2 5.5 0.4 16.3 5.5

Djibouti 4.9 1.0 1.2 2.8 0.0

Iran 11.4 3.6 1.2 6.6 2.4

Yemen 3.3 0.4 2.1 0.8 0.0

Source: UNCTAD, Statistical Report 2009

29


TAbLE A2.6 Concentration and Diversification indices of Export Products in MENA

1995 2007

ExportersNumber of products

Concentration index

Diversification index

Number of products

Concentration index

Diversification index

MENA 152 0.51 0.71 196 0.49 0.69

GCC 174 0.69 0.78 214 0.62 0.76

Bahrain 138 0.48 0.77 150 0.78 0.82

Kuwait 135 0.94 0.83 187 0.66 0.82

Oman 189 0.77 0.71 210 0.58 0.68

Qatar 102 0.64 0.83 238 0.50 0.81

Saudi Arabia 220 0.74 0.86 242 0.76 0.78

UAE 258 0.56 0.69 258 0.42 0.64

Maghreb 123 0.42 0.69 165 0.44 0.71

Algeria 99 0.53 0.81 121 0.60 0.81

Libya 29 0.77 0.52 95 0.85 0.80

Morocco 169 0.18 0.75 203 0.15 0.68

Tunisia 193 0.22 0.66 240 0.18 0.56

Mashreq 177 0.28 0.64 203 0.29 0.57

Iraq

Jordan 221 0.21 0.64 231 0.17 0.59

Lebanon 180 0.10 0.59 190 0.37 0.54

Syria 131 0.54 0.69 188 0.32 0.57

Other 136 0.66 0.75 202 0.62 0.74

Egypt 164 0.25 0.66 238 0.31 0.67

Djibouti

Iran 175 0.83 0.82 238 0.75 0.75

Yemen 70 0.89 0.76 130 0.78 0.79

Sources: UN Comtrade statisticsConcentration index reflects the Herfindahl-Hirschmann index of the export product concentration of a country or a group of countries. It ranges between 0 to 1 where 1 represents total concentration. Diversification index reveals the extent of the differences between the structure of trade of the country or group of countries and the world average. The index value ranges from 0 to 1.

WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION

Economic Integration in the Mashreq

Documents

World Bank Documentdocuments.worldbank.org/curated/en/929821468278677551/pdf/575200WP0... · Libya, Mauritania, Morocco, and Tunisia), and the . Mashreq (Iraq, Jordan, Lebanon, Syria,