Working Paper: CEPR ID: DP1226
Authors: Bernard Hoekman
Abstract: A basic tenet of economic reform efforts in much of the Middle East and North Africa region has been gradualism. Partial and slow reform has led to a lack of credibility, limiting private sector supply response. The creation of the World Trade Organization, and the offer from the EU to establish a Euro-Meditteranean Economic Area provide possible institutional frameworks that can greatly enhance the credibility of a gradual reform strategy. Neither option is a panacea, however, and much depends on the willingness of governments to exploit opportunities that are embodied in these institutional options. Both avenues should be pursued simultaneously in order to limit the potential negative trade diversion effects of a preferential agreement with the EU.
Keywords: trade liberalization; trade policy; regional integration
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Gradual reforms (P39) | Limited private sector supply response (J23) |
| WTO membership (F13) | More credible reform process (D78) |
| Lack of private sector supply response (P42) | Diminished political support (D72) |
| EU agreements (F53) | Enhanced integration and investment (F15) |