Harnessing Trade for Development and Growth in the Middle East : Report by the Council on Foreign Relations Study Group on Middle East Trade Options

The countries of the Middle East and North Africa (MENA) have failed to integrate into the global market. The region's relative isolation is particularly harmful because MENA economies are small and fragmented. Standing alone, such a feature would not be an insuperable obstacle. But the combination - small markets and high barriers to trade - denies the region the opportunity to grow, freezes its trade structure, hinders economic diversification, and leads to overly rigid economies that do not produce the more modern, dynamic goods and services that currently are most in demand.
Lowering obstacles to trade will help address this problem. But a key premise of this Council on Foreign Relations Paper is that what happens within a country's borders is as important as what occurs at the border. The survey of regional businesses and entrepreneurs that accompanies the report makes clear that inefficiencies and bottlenecks in the service sector are a significant hindrance to investment. Domestic service sector reform therefore should be a priority for MENA countries intent on achieving deeper integration into the global economy and higher and more sustainable levels of growth.