Published on Arab Voices

Can the Arab Spring spur regional integration?

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ImageThe list of challenging issues that led to the Arab Spring are now well known and will need to be overcome to meet the aspirations of the people of the region. These range from governance, education and bloated public sectors to a correspondingly weak private sector, all of which crystallize around the issue of employment, particularly for youth and women. The OECD's "Arab World Competitiveness Report, 2011-2012" estimates that 25 million jobs will be needed over the next decade just to keep unemployment at current levels (over 10%). This requires average annual growth rates of 5.5 percent, one point above the last decade’s average growth. Research from the World Bank suggests the region needs to do even better: “Before the uprisings, the Middle East and North Africa (MENA) was expected to return to pre-crisis growth rates of 4.8 percent by 2011-12, but growth rates in this range are not high enough to address the key challenges facing the region, including high unemployment rates – especially for young people and low labor-force participation rates, notably for women. To address these challenges MENA economies should be growing at East Asia rates…(7% or so)."

The political change sweeping through the region may speed up many reforms; however, there is an inertia that will need to be overcome. As the Eurozone is in crisis and the global recovery remains fragile, a new vision and source of economic vigor may be needed.

Yet, the building blocks of a new vision are (possibly) there. Arab League's Secretary General Nabil Al-Arabi underlined the importance of regional economic blocs in our era. At the league's Economic and Social Council on February 9, 2012, he called for greater regional economic integration. This is echoed by Manuela Ferro, the World Bank Director who leads the poverty and economics thinking in MENA. In A Reform Agenda for Arab Economies, she writes: "Economic integration through greater trade and investment is an overarching development strategy that can do for the MENA region what it did before for Central and Eastern Europe, East Asia, and other emerging trading partners that are now on sustainable growth paths."

In short, could enhanced regional integration be the key to a new vision for the post-Arab spring era? An era free of the often meaningless rhetoric of the past but targeting measurable gains in markets, labor and otherwise? An era focused on solving common educational and environmental issues? Clearly there are economies of scale to be gained. One could argue that the current focus on moving beyond economies held back by privileged cronies will also remove vested interests that might have impeded meaningful integration in the past.

I discussed these ideas with World Bank colleagues while writing this blog Jonathan Walters, who leads regional strategy, remarked that when one talks about economies of scale and agglomeration, other centers of economic growth may beckon harder and with greater attraction: the Western European Union (EU) for the Maghreb and Turkey and its growing economy and links to the EU for the Mashreq. In this way, integration within the Maghreb or within the Mashreq may have much more impact than integration between them as internal integration supports the larger integration process. Caroline Freund, Chief Economist, noted that except for the EU, regionalism has done little for jobs or growth in the rest of the world. In the most successful case, the EU was security driven – both in the post WWII era and the post 1989 implosion of the Soviet Union. Simon Bell, who manages the finance and private sector work in MENA, underlined the need for more fundamental changes such as the prevailing mindset that he believes, invariably and almost solely, focuses on government jobs.

Still, the answer must be that these avenues towards a more open and larger market must be tried – not only to the EU, Turkey and beyond, but also by breaking down barriers within the Arab world. One need not come at the expense of the other. Indeed, when one door narrows one can always push a bit harder on the others. In the article Opening Europe's Mediterranean Window, former Spanish Foreign Minister Ana Palacio proposes to use an enhanced economic linkage between the EU and the Arab World that would also include reducing barriers to trade within the Arab World.  She mentions as examples the importance of cross-border infrastructure and solar energy. Both of which, with greater Arab integration and cooperation, would be highly complementary to European integration.

What do you think?


Omer Karasapan

Regional Knowledge & Learning Coordinator

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