57520 WORLD BAN K M I D D L E E A S T A N D N O R T H A F R I C A R E G I O N ECONOMIC INTEGRATION IN THE MASHREQ WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION OCTOBER 2010 Economic Integration in the Mashreq Office of the Chief Economist Middle East and North Africa Region The World Bank ©2010 The International bank of Reconstruction and Development/The World Bank 1818H Street, NW Washington DC 20433 Telephone: 202 473 1000 Internet www.worldbank.org E-mail feedback@worldbank.org 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. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818H Street, NW, Washington, DC 20433, USA, fax 202­522­2422, e-mail pubrights@ worldbank.org. Cover photograph: © World Bank/Bunyad Dinc. A FREE PUBLICATION Acknowledgements iv Contents 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 5 Figure 2 Regional Exports as % of Total Exports, 2007 5 Figure 3 Concentration and Diversification Indices of Export Products in MENA 6 Figure 4 Trade in Commercial Services *(% GDP) 7 Figure 5 Ease of Doing Business Ranking 8 Figure 6 Logistic Performance Index 8 Figure 7 Remittances, FDI and ODA 9 Figure 8 Remittances as Share of GDP 2007 in Mashreq Countries 9 Annexes Annex 1 Trade Agreements in the MENA Region 17 Annex 2 Statistical Tables 18 ACKNOWLE DG E M E NTS 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 iv versions of the report. Isabelle Chaal Dabi and Liliane Vert (World Bank) provided valuable administrative assistance and Amanda Green (Consultant) edited the report. Though the Middle East and North Africa (MENA) region has weath- Foreword 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 and the adoption of low common tariffs an increasing momentum on the part of by the Gulf Cooperation Council (GCC) the region and the World Bank Group to which coupled with improvements in focus on a set of initiatives to promote infrastructure, especially roads and tele- more cooperation within the region. communications is generating benefits. These initiatives include a host of analyt- But much remains to be done, espe- ical pieces to examine the current state cially in reducing nontariff barriers to of regional collaborative arrangements trade, harmonizing policies and proce- with emphasis on assessing and explor- dures, and facilitating cross-border trade ing ways of fostering greater trade inte- through development of infrastructure gration, labor mobility and migration links and trade facilitation. Fortunately, prospects, prospects for energy integra- trade in services has recently emerged tion and resource sharing and infrastruc- on the agenda of national and regional ture development to reduce nontariff authorities--this is an area of substantial barriers. potential welfare gain for the region. The region has been able to make some Recognizing the problems, the World inroads, albeit at different degrees in Bank has been working closely with the each of the geographical groupings, to MENA region to develop and imple- support the integration of the Arab world ment regional activities--investment into the global economy. To start off the projects, institution-building, harmoni- removal of intra-regional tariffs under zation of policies and procedures--that the Pan-Arab Free Trade Area (PAFTA) are likely to enhance economic growth v FOREWORD and address common challenges across the re- Kuwait, Oman, Qatar, Saudi Arabia, and the gion. As part of this endeavor, the Office of United Arab Emirates), the Maghreb (Algeria, the Chief Economist, MENA Region, has pre- Libya, Mauritania, Morocco, and Tunisia), pared a series of reports to assess the achieve- and the Mashreq (Iraq, Jordan, Lebanon, Syria, ments of the region with respect to integration. and West Bank and Gaza). Egypt is sometimes The first report, "2008 Economic Developments classified in the literature as a Mashreq coun- and Prospects," looks at the role of integration try though with ties with North Africa given its in global competitiveness for the region as location. a whole and special reports have been pre- pared to take stock of the regional cooperative Shamshad Akhtar frameworks, their issues and prospects. These Vice President reports examine economic integration among Middle East and North Africa Region three sub-regions: the Gulf countries (Bahrain, The World Bank vi AMF Arab Monetary Fund Acronyms and AMU Arab Maghreb Union ASEAN AWI Association of Southeast Asian Nations Arab World Initiative Abbreviations COMESA Common Market for Eastern and Southern Africa ECO Economic Cooperation Organization EFTA European Free Trade Association ESCWA Economic and Social Commission for Western Asia EU-MFTA EU-Mexico Free Trade Agreement EUROMED Euro-Mediterranean Free Trade Area EU European Union FDI Foreign direct investment GAFTA Greater Arab Free Trade Agreement GCC Gulf Cooperation Council GDP Gross domestic product IMF International Monetary Fund IT Information technology MENA Middle East and North Africa MERCOSUR Mercado Común Sur (Argentina, Brazil, and Uruguay) NAFTA North American Free Trade Agreement ODA Official Development Assistance PAFTA Pan-Arab Free Trade Area PTAs Preferential Trading Arrangements TRIST Tariff Reform Impact Simulation Tool UAE United Arab Emirates UNCTAD United Nations Conference on Trade and Development WBG West Bank and Gaza WTO World Trade Organization vii This report reviews the status of Mashreq countries' economic inte- Executive gration with the world, with the Arab world, and within the Mashreq subregion itself. It examines the drivers of progress to date and barri- Summary 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 are relatively less concentrated than other countries trade more with the European MENA countries, with the exception of Union (EU) than with other countries Tunisia and Morocco. in MENA or among themselves, but ac- count for a significant share of MENA's Regional economic integration would be trade in services. With the exception of enhanced through better trade facilita- Iraq, a major oil exporter, the Mashreq tion procedures and by better transport countries export a relatively large share of infrastructure. Policies relating to further manufactured goods--surpassed only by improving the investment climate and Tunisia and Morocco. Mashreq exports private sector development also matter. 1 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 2000­2008. 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- 2 dan, with the potential to expand to Algeria, Lebanon, Libya, Mauritania, Syria, and P A R T i C i P AT 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 WBG. The EU supported the agreement with MENA countries' imports from the EU, they the aim of establishing a free trade area and have had no positive impact on their exports as a possible first step in the establishment of to the EU. A recent World Bank report (Pigato a Euro-Mediterranean Free Trade Area (EU- 2009) noted that preferential agreements with ROMED). the EU have not helped MENA countries in general withstand competition from China In addition to these regional agreements, some and India.1 Mashreq countries have entered into bilateral agree- ments with the United States, EU, and Turkey. All Mashreq countries are members of the League of The 1995 Barcelona Conference set the ambi- Arab States, which has historically taken the lead on tious goal of establishing EUROMED, which integration efforts in the region. The League's ob- would include the EU and MENA countries. jective is to "draw closer the relations between This goal is to be achieved through associa- member States and co-ordinate collaboration tion agreements between the EU and MENA between them, to safeguard their indepen- countries and free trade agreements among dence and sovereignty, and to consider in a MENA countries. Three Mashreq countries general way the affairs and interests of the have already signed an association agreement Arab countries." Through its various institu- with the EU: Jordan in 1997, WBG in 1997, tions, the Arab League helps to facilitate po- and Lebanon in 2002. Syria initiated discus- litical, economic, cultural, scientific, and social sions in 2008. Using the augmented gravity affairs among its members. Since its inception model for all MENA countries for which as- in 1945, the League has served as a forum for sociation agreements have been signed, Cies- member states to coordinate their policy posi- lik and Hagemejer (2007) found that, while tions, to deliberate on matters of common con- these agreements have significantly increased 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 3 structures that shelter them from competition and handcuff their ability to source inputs from other locations. See Pigato (2009), page xxii. Chapter 2 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 (16­17 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 4 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- 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 FiGuRE 1 MENA Trade by Country Sub-groups, 2007 A. Total Trade (% GDP) B. Total Non-Oil Trade (%GDP) 100 50 80 40 60 30 40 20 20 10 0 0 MENA GCC Maghreb Mashreq Other MENA GCC Maghreb Mashreq Other Sub-region Rest of the World Other MENA Source: Annex 2, Tables A2.2 and A2.4. tional benchmarks such as ASEAN, the EU, FiGuRE 2 Regional Exports as % of Total Exports, 2007 and NAFTA. There is a great deal of variation among countries. Syria conducts as much as 42 EU-25 NAFTA percent of its nonoil trade within the Mashreq, ASEAN while the corresponding figure for Iraq is less MERCOSUR than 3 percent. Syria and Lebanon seem to GCC Mashreq trade more with each other than other coun- MENA tries in the group. Syria is also Iraq's main MENA (other) trading partner in the subregion; Iraq imports Maghreb nearly one-third of its total nonoil imports 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 from Syria. Source: Annex 2, Table A2.1. Among the Mashreq countries, Jordan, Syria, and WBG trade the most within the MENA region. ia's relative success can be attributed to the Over three-quarters of WBG's trade in 2007 government's efforts since the early 2000s to was with MENA countries, followed by Jor- implement trade reform and export diversifi- dan (one-third), Syria (one-fourth), and Leba- cation (World Bank 2009c). non (one-fifth). The two countries outside the Mashreq subregion that trade significantly An International Monetary Fund (IMF) study (Rodol- within MENA are Djibouti and Kuwait. For phe 2001) shows that international and intraregional most Mashreq countries, there has been a trade in the Mashreq (defined to include Egypt and significant improvement in trade since 2000, Israel and exclude Iraq) are below levels predicted by with Syria showing a fourfold increase. Syr- the gravity model.2 At least three policy variables 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. 5 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 GCC and the Maghreb, and between Mashreq exchange rate appreciation, and political uncer- and Maghreb countries. The same conclusion tainty. When Israel is not included in the model, applies to the EU partnership agreements. however, trade in the Mashreq is found to be The findings of this study cannot be compared higher than predicted. This indicates that low with the findings of the IMF study discussed levels of intraregional trade are explained by above due to variations in country coverage limited trade between Israel and its neighbors. and model specifications. A separate Arab Monetary Fund (AMF) study (2005) focusing on intra-Arab exports for the pe- Export Concentration and Diversification riod 1997­2003, concludes that intra-Arab exports are modest and below their potential (as estimated Jordan and Syria are among the least concen- by the gravity model). It is suggested that Arab trated countries in the MENA region with free trade agreements could increase exports respect to export products, with a concentra- without the risk of trade diversion if countries tion index of less than 0.2 (Figure 3). These made a strong commitment to address defi- countries have seen some improvement be- ciencies in Arab export capacity. The paper tween 1995 and 2007, but Lebanon (the only also notes that low intra-Arab exports arise other Mashreq country for which information mainly from the lack of exports between the is available) has not3. Both the Mashreq and FiGuRE 3 Concentration and Diversification indices of Export Products in MENA Libya Kuwait Bahrain Bahrain Yemen Qatar Saudi Arabia Algeria Iran Libya Kuwait Yemen Algeria Saudi Arabia Oman Iran Qatar Morocco UAE Oman Lebanon Egypt Syria UAE Egypt Jordan Tunisia Syria Jordan Tunisia Morocco Lebanon 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 6 1995 2007 Source: Table A2.6 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 MENA more broadly are less diversified than The importance of this sector is reflected in the world average. the contribution of services trade to subregion- al GDP; in 2005, exports and imports were The MENA region as a whole is characterized estimated to be 24 and 20 percent of GDP by exports of primary commodities, essentially (Figure 4). The subregion is thus a net exporter oil and gas (86 percent); manufactured goods of trade services--mostly tourism. Lebanon is account for the remaining 14 percent. For the the economy most open to the services trade, Mashreq countries, with the exception of Iraq, with 50 percent of exports and 37 percent of the reverse is true. Manufactured exports ac- imports. count for 79 percent of total exports in Jordan, 49 percent in Lebanon, and 36 percent in Syr- In 2005, the Mashreq as a whole exported mainly ia. Tunisia and Morocco are the only two other travel and information technology (IT) services, countries doing well in terms of manufactured which amounted to 20 and 16 percent, respectively, exports (72 and 66 percent, respectively). of total service exports.5 Imports also are domi- Table A2.5 provides detailed information on nated by travel and IT services, which account the type of export items from MENA and its for 24 percent each, followed by transportation subregions. services at 10 percent. Insurance and financial services are the least traded by the region, re- flecting the fact that the financial sector lags Trade in Services Trade in services is scarcely covered in existing re- gional integration agreements in MENA. Gen- FiGuRE 4 Trade in Commercial Services* (% GDP) eral attitudes toward openness to the services 60.0% trade vary considerably across the region. For example, the two leading countries in this re- 50.0% spect, Jordan and Saudi Arabia, have signed 40.0% commitments in thirty or more of fifty-five ser- 30.0% vices sub-sectors covered by the WTO Gen- 20.0% eral Agreement on Trade in Services, whereas 10.0% other members have signed fewer than ten 0.0% such agreements. Jordan Lebanon Syria WBG Mashreq MENA WORLD Export Import Trade in services for Mashreq countries represents an Source: GDF and WDI data 2009. impressive share of the MENA total (20 and 32 per- *Commercial services include information technology services, insurance and cent of MENA exports and imports, respectively).4 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. 7 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 behind in most Mashreq countries, with the poor enabling environment for trade in the notable exception of Lebanon. Lebanese banks Mashreq, first with respect to the ease of do- have recently opened branches in Iraq, Jordan, ing business, and second with respect to logis- Egypt, Oman, Saudi Arabia, and Libya. tics performance. A recent World Bank study found the overall restrictiveness of services trade policies for the two Mashreq countries in Constraints to Trade Integration the survey (Lebanon and Jordan) to be high by international standards, but slightly below the The factors behind the low trade performance PAFTA average.7 in Mashreq countries are multi-faceted. They include the low level of complementarity of trade (arising from similar production struc- Capital Flows tures), poor investment climates, weak politi- cal commitment to economic integration, lack Mashreq countries have been the largest recipients of a common vision, and ongoing conflicts of foreign direct investment (FDI) as a share of in the region.6 Figures 5 and 6 illustrate the GDP in the MENA region. In 2007, FDI for the FiGuRE 5 Ease of Doing business Ranking FiGuRE 6 Logistics Performance index 180 4 160 140 3 120 100 80 2 60 40 18 17 16 20 10 12 1 0 Iraq Jordan Lebanon Syria WBG 0 World Ranking MENA Ranking 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 Integration­Opportunities 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 8 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. 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 Mashreq countries represented 5.8 percent Mashreq countries rely heavily on remittances. of GDP, followed by Maghreb countries (3.7 The most intense intraregional remittance percent) and GCC countries (2.8 percent). corridors are those from GCC to Mashreq Inward FDI stocks in Jordan, at nearly 102 countries, and between Mashreq countries percent of GDP, are the highest in the entire (essentially WBG and Jordan). In most years, MENA region (and among developing coun- remittances have exceeded capital flows and tries), followed by Lebanon (83.5 percent) have remained the most stable source of for- and Syria (22 percent).8 The ratio in Syria is eign capital in Mashreq countries. In 2007, re- nearly half of what used to be in 2000. Over mittances constituted a larger share of capital the long term, FDI flows have not been as inflows in Mashreq countries than FDI and dynamic as in other emerging economies, official development assistance combined such as those in Eastern Europe. Financing and accounted for as much as 15 percent of through international capital markets still GDP (Figure 7). Within the subregion, and appears to be limited compared to other re- compared to other MENA countries receiv- gions. While information on the sources of ing remittances, Mashreq countries have FDI is not available, it is likely that countries the highest ratio of remittances to GDP close to the Gulf region, such as Jordan and (Figure 8). In 2007, for example, remittanc- Lebanon, have received a large share of their es were high and growing in Lebanon (24.4 foreign capital inflows from resource-rich percent of GDP), high and relatively stable MENA countries.9 in Jordan (22.7 percent of GDP), and rela- FiGuRE 7 Remittances, FDi and ODA Countries FiGuRE 8 Remittances as Share of GDP 2007 in Mashreq (US$ billions) Countries (US$ billions) 12 30% 10 25% 8 20% 6 4 15% 2 10% 0 ­2 5% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Workers's Official development Foreign direct 0% remittances assistance investment 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. 9 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 tively low in the case of Syria (2.2 percent of ber of migrants increased by 132 percent in GDP).10 the Mashreq, compared to 75 percent in the GCC and 20 percent in the Maghreb (Table 1). Within the Mashreq subregion, many coun- Labor Mobility tries serve as both origin and destination. Emi- grants typically head to GCC countries or to Labor mobility is an important element of regional other Mashreq countries. In 2000, while only integration in the Mashreq. All of the Mashreq 27 percent of migrants to Mashreq countries countries have seen extensive migration, both originated from MENA countries, 56 percent temporary and permanent, since the 1970s. of migrants coming from the Mashreq stayed Migrants from Mashreq countries are often in the region.11 Emigration farther abroad has skilled and more likely to be temporary mi- been significant, especially from Lebanon. Jor- grants in other Arab countries. Though this dan, Lebanon, and Syria import low-skilled group of countries primarily sends migrants to labor from Asia and host a large number of other Arab countries, it also exports workers to refugees.12 The conflict in Iraq has added an- Western destinations such as the United States, other dimension to migration in the subregion. Europe, and Australia, though in these cases The best available evidence suggests that, be- migration tends to be permanent. tween 2003 and 2009, as many as one million Iraqis could have been displaced inside Iraq; Migration trends vary widely between MENA sub- and in what is often called the Iraq Diaspora, regions. Mashreq countries dominate regional another 1.5 million could have been displaced migration. Between 1990 and 2010, the num- to other countries, namely Jordan and Syria.13 TAbLE 1 international Migrants by Development Group and Arab World Sub-regions incremental Percentage Migrants as Percentage Number of Migrants (millions) Change (millions) Change of Population 1990 2010 1990­2010 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. 10 See United Nations (2006). 13 World Bank (2009a). Integration through Physical Chapter 3 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. 11 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 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). Sixty percent of the total railway network called ments. In Lebanon, foreign carriers are allowed for in the Agreement on International Railways to enjoy unrestricted use of services within in the Arab Mashreq has yet to be built. Further- their borders. A ministerial agreement for a more, interconnection between existing rail- multilateral Arab accord to liberalize air trans- ways in the Maghreb and Mashreq remains port was signed by 12 countries in November dependent on the decision of the Libyan au- 1998. The accord includes clauses on: (i) the thorities to proceed with construction of their award of air traffic rights; (ii) implementation railway project. More importantly, large sec- of air traffic rights; (iii) granting of operating tions of the existing railways in the region licenses and permits; (iv) commercial require- cannot be interconnected because of track ments for airlines; (v) government subsidies to gauge differences. airlines; (vi) flight safety and civil aviation se- curity; (vii) protection of the environment and Regarding the air transport sector, Jordan and Leba- consumer interests; and (vii) consultation and 12 non have adopted or signed open skies policy agree- dispute resolution. 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- out of 1,850 bcm in proven reserves. There mance over the last five years. The six medium- are important gas pipeline projects under con- sized Mashreq ports (Lattakia, Tartous, Tripoli, sideration in the rest of the region as well, in- Beirut, Aqaba, and Um Qasr) have seen strong cluding: (i) the Iraq Gas Pipeline, which aims growth in container traffic and improved pro- to export Iraq's natural gas to Turkey through ductivity over the last decade, but all of them Syria, and will connect Iraq to the Arab gas are "feeder ports" that cover only the trans- pipeline as a backup for Egypt and Syria gas shipment of goods to larger hub ports. exports; and (ii) the Iraq-Kuwait Gas Pipeline, which will enable the export of 35mcf/d from Lebanon and Syria interconnected their power Iraq to Kuwait after rehabilitating the existing grids through a 66kV transmission line in 1973. pipelines. A 230kV transmission line was subsequently added to increase power exchange between Significant progress has been made on investment the two countries, although energy trade on and regional connectivity in the telecommunications the first power line did not exceed 53 percent sector, thanks to privatization and liberalization of the designed capacity (150 MW). Similarly, policies adopted by many countries in the MENA Jordan and Syria installed 66kV and 230kV region. Kuwait exported US$ 3.4 billion in tele- transmission lines across their common bor- communications services in 2006, connecting der. Both lines were utilized to back up either an estimated 27 million mobile subscribers in of the two systems in case of network outages. MENA. Egypt's Orascom connected 50 mil- There are power links between Iraq, Syria, and lion subscribers, many in regional markets Turkey, but the system is not synchronized. including Tunisia and Algeria. Qatar Telecom owns operators in Kuwait, Iraq, Algeria, Tu- The Euro-Arab Mashreq Gas Pipeline project is the nisia, Saudi Arabia, and WBG. This thriv- most important cross-border gas pipeline project. ing source of both regional FDI and services Its aim is to help integrate the gas markets of trade provides a model for integration in other Egypt, Jordan, Lebanon, and Syria with a view sectors. It has also led to the emergence of a to creating a regional internal gas market to regional institution that promotes common be integrated with the EU internal gas market. regulatory and technical standards, the Arab Egypt has ready-to-export gas of 1,651 bcm, Network for Regulators. 13 Conclusion 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. With the exception of Iraq, a major oil export- has been made under PAFTA on the re- er, the Mashreq countries export a relatively moval of intra-regional trade tariffs and large share of manufactured goods--surpassed in improving customs clearance proce- only by Tunisia and Morocco. Furthermore, dures, more remains to be done on in- Mashreq exports are relatively less con- frastructure, especially in the areas most centrated than other MENA countries, relevant to regional integration (roads, with the exception of Tunisia and Mo- railways, and ports). rocco. Overall, the Mashreq, like other subregions in MENA, has yet to take full Mashreq countries are well connected through advantage of regional economic agree- roads and air transport, but substantial in- ments. vestment is needed to improve the quality of road transport. The interconnectivity of Opportunities for trade between the Mashreq energy (electricity grids and gas pipe- and other countries in the region and else- lines) is limited, though a number of where would be enhanced through better investment projects are in the pipeline. trade facilitation procedures and better trans- Telecommunications, on the other hand, port infrastructure. While good progress is relatively well advanced. 14 Bolbol, Ali A. and Ayten M. Fatheldin. 2005. "Intra-Arab Exports and Direct Invest- References 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, 2001­2008. 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." 15 Trade Agreements in Annex 1 the MENA Region United States EFTA European Union Turkey Afghanistan, Azerbaijan, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan, Syria Iran Turkmenistan, WBG Uzbekistan Lebanon Iraq GCC ECO AMU Kuwait Tunisia Jordan Agadir Bahrain Sudan Egypt Qatar Morocco Saudi Arabia Algeria Oman Mauritania Libya Yemen Djibouti GAFTA MENA Burundi, Comoros, D. R. Congo, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritus, Rwanda, Seychelles, Sudan, Singapore Swaziland, Uganda, AMU: Arab Maghreb Union (5) Zambia, Zimbabwe COMESA 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) Regional Agreements EFTA: European Free Trade Association (4), includes Iceland, Switzerland, Norway, and Liechtenstein Bilateral Agreements Agadir: Agadir Agreement for the Establishment of a Free Trade Zone between Arabic Mediterranean Nations (4) Source: World Bank. 2008. MENA Economic Developments and Prospects. 17 Annex 2 Statistical Tables TAbLE A2.1 MENA Total Trade, 2007 (uS$ millions) TOTAL TRADE WiTH THE WORLD Total Exports Total imports (in uS$ million) (in uS$ million) Total Trade MENA Region 752,054 482,435 1,234,489 By geographic sub-region GCC Countries 458,055 279,455 737,509 Bahrain 6,878 11,511 18,389 Kuwait 57,799 21,248 79,047 Oman 22,137 15,952 38,088 Qatar 40,586 23,388 63,974 Saudi Arabia 220,359 89,540 309,899 United Arab Emirats 110,296 117,816 228,112 Maghreb 132,697 78,324 211,020 Algeria 54,859 27,629 82,488 Libya 45,674 11,561 57,234 Morocco 17,188 31,624 48,812 Tunisia 14,976 19,071 34,046 (Mauritania)* 1,316 1,430 2,746 Mashreq 50,562 43,192 93,754 Iraq 36,302 10,437 46,739 Jordan 4,437 13,406 17,843 Lebanon 2,642 11,990 14,632 Occ.Pal.Terr 64 3,141 3,206 Syrian Arab Republic 7,117 14,655 21,772 Other 110,741 81,465 192,206 Egypt 24,344 26,927 51,271 Djibouti 202 2,051 2,253 Iran 79,407 43,985 123,392 18 Yemen 6,788 8,502 15,290 Source: World Trade Integrated Solution. *Mauritania is not part of the aggregates. S TAT i S T i C A L TA b L E S A N N E x 2 TOTAL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS Total Trade within Total Exports Total imports Total Exports Total imports each Sub-Region (in uS$ million) (in uS$ million) Total Trade (in uS$ million) (in uS$ million) (in uS$ million) 65,314 57,107 122,421 49,015 26,076 75,091 26,559 19,516 46,076 1,465 1,106 2,571 1,189 1,012 2,201 1,811 3,150 4,961 1,186 2,244 3,430 3,989 5,020 9,009 3,341 4,748 8,089 2,247 3,682 5,929 2,015 3,283 5,298 21,245 6,889 28,134 13,046 3,786 16,832 18,259 6,228 24,487 5,783 4,443 10,225 3,981 7,644 11,626 2,808 3,142 5,950 1,239 927 2,166 709 280 988 744 749 1,494 744 749 1,494 568 4,328 4,896 198 1,091 1,288 1,431 1,639 3,070 1,157 1,022 2,179 4,444 14,531 18,975 1,380 1,380 2,760 288 1,976 2,264 233 233 1,285 4,708 5,993 276 510 787 1,197 1,731 2,928 274 281 556 40 2,386 2,427 31 45 76 1,635 3,729 5,364 565 543 1,109 7,873 8,857 16,730 194 162 356 4,671 4,752 9,423 135 49 183 148 715 863 7 28 35 2,807 1,236 4,042 29 9 39 247 2,154 2,401 23 77 99 19 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 TRADE WiTH THE WORLD Total Exports (% GDP) Total imports (% GDP) Total Trade (% GDP) MENA Region 46.5 29.8 76.3 By geographic sub-region GCC Countries 57.7 35.2 92.9 Bahrain 62.5 104.6 167.2 Kuwait 52.5 19.3 71.9 Oman 55.3 39.9 95.2 Qatar 57.2 32.9 90.1 Saudi Arabia 57.7 23.4 81.1 United Arab Emirats 61.3 65.5 126.7 Maghreb 42.3 24.9 67.2 Algeria 40.9 20.6 61.6 Libya 65.2 16.5 81.8 Morocco 22.9 42.2 65.1 Tunisia 42.8 54.5 97.3 (Mauritania)* 49.8 54.1 103.9 Mashreq 35.6 30.4 66.0 Iraq 58.6 16.8 75.4 Jordan 27.7 83.8 111.5 Lebanon 10.6 48.0 58.5 Occ.Pal.Terr -- -- -- Syrian Arab Republic 18.2 37.6 55.8 Other 30.1 22.1 52.3 Egypt 18.4 20.4 38.8 Djibouti 25.2 256.4 281.6 Iran, Islamic Republic of 36.8 20.4 57.1 Yemen 35.7 44.7 80.5 Source: Table A2.1. *Mauritania is not part of the aggregates. 20 S TAT i S T i C A L TA b L E S A N N E x 2 TOTAL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS Total Exports Total imports Total Trade Total Exports Total imports Total Trade (% GDP) (% GDP) (% GDP) (% GDP) (% GDP) (% GDP) 4.0 3.5 7.6 6.2 3.3 9.5 3.3 2.5 5.8 13.3 10.1 23.4 10.8 9.2 20.0 1.6 2.9 4.5 1.1 2.0 3.1 10.0 12.6 22.5 8.4 11.9 20.2 3.2 5.2 8.4 2.8 4.6 7.5 5.6 1.8 7.4 3.4 1.0 4.4 10.1 3.5 13.6 3.2 2.5 5.7 1.3 2.4 3.7 0.9 1.0 1.9 0.9 0.7 1.6 0.5 0.2 0.7 1.1 1.1 2.1 1.1 -- -- 0.8 5.8 6.5 0.3 1.5 1.7 4.1 4.7 8.8 3.3 2.9 6.2 3.1 10.2 13.4 1.0 1.0 1.9 0.5 3.2 3.7 0.4 -- -- 8.0 29.4 37.5 1.7 3.2 4.9 4.8 6.9 11.7 1.1 1.1 2.2 -- -- -- -- -- -- 4.2 9.6 13.8 1.4 1.4 2.8 2.1 2.4 4.5 0.1 0.0 0.1 3.5 3.6 7.1 0.1 0.0 0.1 18.5 89.4 107.9 0.9 3.4 4.4 1.3 0.6 1.9 0.0 0.0 0.0 1.3 11.3 12.6 0.1 0.4 0.5 21 A N N E x 2 S TAT i S T i C A L TA b L E S TAbLE A2.3 MENA Non-Oil Trade, 2007 (uS$ millions) TOTAL NON-FuEL TRADE WiTH THE WORLD Total Non-Fuel Exports Total Non-Fuel imports Total Non-Fuel Trade (in uS$ million) (in uS$ million) (in uS$ million) MENA Region 142,436 453,725 596,161 By geographic sub-region GCC Countries 71,811 271,369 343,180 Bahrain 4,279 5,524 9,802 Kuwait 2,778 21,126 23,904 Oman 2,169 15,391 17,560 Qatar 3,993 23,263 27,255 Saudi Arabia 29,912 89,316 119,228 United Arab Emirats 28,680 116,750 145,429 Maghreb 33,422 69,211 102,633 Algeria 2,478 27,319 29,797 Libya 1,548 1,210 2,758 Morocco 16,736 25,274 42,009 Tunisia 12,661 16,618 29,279 (Mauritania)* 977 994 1,971 Mashreq 10,456 31,620 42,076 Iraq 664 215 879 Jordan 4,397 10,460 14,857 Lebanon 2,636 9,372 12,008 Occ.Pal.Terr 64 1,917 1,981 Syrian Arab Republic 2,695 9,870 12,565 Other 26,748 81,524 108,272 Egypt 14,339 22,953 37,292 Djibouti 175 782 957 Iran, Islamic Republic of 11,814 3,682 15,495 Yemen 420 6,678 7,098 Source: World Trade Integrated Solution. *Mauritania is not part of the aggregates. 22 S TAT i S T i C A L TA b L E S A N N E x 2 TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL NON-FuEL TRADE WiTHiN Sub-REGiONS Total Non-Fuel Total Non-Fuel Total Non-Fuel Exports imports Trade Total Exports Total imports Total Trade (in uS$ million) (in uS$ million) (in uS$ million) (in uS$ million) (in uS$ million) (in uS$ million) 52,960 38,217 91,177 40,124 24,904 65,028 21,182 18,514 39,696 1,457 1,064 2,521 1,181 973 2,154 1,801 3,066 4,868 1,179 2,161 3,340 3,444 4,617 8,061 2,800 4,345 7,144 1,215 3,576 4,791 1,001 3,178 4,179 14,166 6,834 21,000 9,320 3,743 13,064 18,041 5,747 23,788 5,701 4,114 9,815 2,276 3,776 6,051 1,516 1,660 3,176 211 909 1,121 177 278 455 117 741 858 -- 830 -- 562 1,476 2,038 192 391 584 1,385 650 2,035 1,146 161 1,307 4,207 6,615 10,822 1,158 1,158 2,317 66 22 88 16 -- -- 1,284 2,003 3,286 276 500 776 1,191 1,251 2,442 274 279 553 40 1,167 1,207 30 44 75 1,627 2,172 3,799 562 335 896 6,352 2,923 9,276 162.15 74.59 237 4,164 1,210 5,374 135 -- 135 148 591 738 -- 27 27 1,841 237 2,078 28 -- 28 200 885 1,085 -- 47 47 23 A N N E x 2 S TAT i S T i C A L TA b L E S TAbLE A2.4 MENA Non-Oil Trade, 2007 (% GDP) TOTAL NON-FuEL TRADE WiTH THE WORLD Total Non-Fuel Exports Total Non-Fuel imports Total Non-Fuel Trade (% GDP) (% GDP) (% GDP) MENA Region 8.81 28.06 36.87 By geographic sub-region GCC Countries 9.04 34.18 43.22 Bahrain 38.90 50.22 89.11 Kuwait 2.53 19.21 21.73 Oman 5.42 38.48 43.90 Qatar 5.62 32.76 38.39 Saudi Arabia 7.83 23.38 31.21 United Arab Emirats 15.93 64.86 80.79 Maghreb 10.64 22.04 32.69 Algeria 1.85 20.39 22.24 Libya 2.21 1.73 3.94 Morocco 22.31 33.70 56.01 Tunisia 36.17 47.48 83.65 (Mauritania)* 36.97 37.61 74.58 Mashreq 7.36 22.27 29.63 Iraq 1.07 0.35 1.42 Jordan 27.48 65.38 92.86 Lebanon 10.54 37.49 48.03 Occ.Pal.Terr -- -- -- Syrian Arab Republic 6.91 25.31 32.22 Other 7.27 22.17 29.44 Egypt 10.86 17.39 28.25 Djibouti 21.84 97.80 119.64 Iran, Islamic Republic of 5.47 1.70 7.17 Yemen 2.21 35.14 37.36 Source: Table A2.3. *Mauritania is not part of the aggregates. 24 S TAT i S T i C A L TA b L E S A N N E x 2 TOTAL NON-FuEL TRADE WiTHiN REGiONS TOTAL TRADE WiTHiN Sub-REGiONS Total Non-Fuel Total Non-Fuel Total Non-Fuel Total Non-Fuel Total Non-Fuel Total Non-Fuel Exports (% GDP) imports (% GDP) Trade (% GDP) Exports (% GDP) imports (% GDP) Trade (% GDP) 3.28 2.36 5.64 -- -- -- 5.05 3.14 8.19 2.67 2.33 5.00 13.24 9.67 22.92 10.73 8.85 19.58 1.64 2.79 4.43 1.07 1.96 3.04 8.61 11.54 20.15 7.00 10.86 17.86 1.71 5.04 6.75 1.41 4.48 5.89 3.71 1.79 5.50 2.44 0.98 3.42 10.02 3.19 13.22 3.17 2.29 5.45 0.72 1.20 1.93 0.48 0.53 1.01 0.16 0.68 0.84 0.13 0.21 0.34 0.17 1.06 1.23 0.75 1.97 2.72 0.26 0.52 0.78 3.96 1.86 5.81 3.27 0.46 3.73 2.96 4.66 7.62 0.82 0.82 1.63 0.11 0.04 0.14 0.03 8.02 12.52 20.54 1.72 3.13 4.85 4.76 5.01 9.77 1.10 1.12 2.21 -- -- -- -- -- -- 4.17 5.57 9.74 1.44 0.86 2.30 1.73 0.79 2.52 0.04 0.02 0.06 3.15 0.92 4.07 0.10 -- 0.10 18.45 73.84 92.29 -- 3.42 3.42 0.85 0.11 0.96 0.01 -- 0.01 1.05 4.66 5.71 -- 0.25 0.25 25 A N N E x 2 S TAT i S T i C A L TA b L E S TAbLE A2.5 A MENA Exports by Products, as % of total Exports of Products, 2007 Primary Primary Food, basic commodities commodities, excluding tea, Table 3 as % of (SiTC 0 + 1 + 2 excluding fuels All food items Food, basic coffee, cocoa and beverages total exports of + 3 + 4 + 68 + (SiTC 0 + 1 + 2 + 4 (SiTC 0 + 1 + (SiTC 0 + spices (SiTC 0 + and tobacco products 667+ 971) + 68 + 667 + 971) 22 + 4) 22 + 4) 22 + 4 less 07) (SiTC 1) MENA 86.3 5.5 2.4 2.3 2.1 0.2 GCC 87.4 4.5 1.1 1.0 0.9 0.1 Bahrain 90.2 11.1 0.5 0.4 0.4 0.1 Kuwait 94.9 0.5 0.2 0.2 0.2 0.0 Oman 90.4 3.6 2.4 2.2 2.2 0.2 Qatar 90.3 0.2 0.1 0.1 0.1 0.0 Saudi Arabia 89.4 1.3 0.9 0.8 0.8 0.1 UAE 77.5 13.7 2.2 1.9 1.7 0.3 Maghreb 81.9 5.7 3.6 3.5 3.5 0.1 Algeria 99.1 0.7 0.2 0.1 0.1 0.0 Libya 96.9 0.4 0.1 0.1 0.1 0.0 Morocco 34.9 31.0 19.1 18.9 18.6 0.1 Tunisia 28.3 11.7 9.8 9.2 8.9 0.6 Mauritania * 94.6 69.6 12.9 12.9 12.9 -- Mashreq 84.0 8.3 5.9 5.4 4.9 0.5 Iraq 99.7 0.1 0.1 0.1 0.1 Jordan 20.8 20.1 13.1 11.4 11.1 1.7 Lebanon 51.5 51.2 16.1 12.7 11.3 3.4 Syria 64.9 23.4 21.0 20.0 17.9 1.0 Other 87.5 9.0 5.8 5.6 5.2 0.2 Egypt 77.8 15.4 9.4 9.4 9.2 0.0 Djibouti 95.1 81.8 73.3 73.3 71.5 0.0 Iran 88.6 8.0 5.0 4.8 4.4 0.2 Yemen 96.7 6.2 5.3 4.8 4.5 0.4 Source: UNCTAD, Statistical Report 2009 *Mauritania is not part of the aggregates. 26 S TAT i S T i C A L TA b L E S A N N E x 2 Ores, metals, precious stones Pearls, precious Agricultural raw and non- stones and non- materials (SiTC monetary gold Ores and metals Non-ferrous Other ores monetary gold 2 less 22, 27 (SiTC 27 + 28 + (SiTC 27 + metals and metals (SiTC 667 + and 28) 68 + 667 + 971) 28 + 68) (SiTC 68) (SiTC 27 + 28) 971) Fuels (SiTC 3) 0.2 2.9 1.6 0.9 0.7 1.3 80.7 0.1 3.3 1.4 0.9 0.4 1.9 82.8 0.0 10.6 10.6 9.0 1.6 0.0 79.1 0.1 0.2 0.2 0.0 0.2 0.0 94.4 0.0 1.2 1.2 0.6 0.6 0.0 86.8 0.0 0.1 0.1 0.0 0.1 0.0 90.1 0.1 0.4 0.3 0.1 0.2 0.1 88.1 0.3 11.2 3.4 2.5 0.9 7.8 63.8 0.3 1.8 1.8 0.4 1.4 0.0 76.2 0.0 0.5 0.5 0.1 0.4 0.0 98.4 0.0 0.3 0.2 0.0 0.2 0.1 96.5 1.5 10.4 10.3 2.2 8.2 0.1 3.8 0.5 1.4 1.4 0.4 1.0 0.0 16.6 0.0 56.7 53.9 -- 53.9 2.8 25.0 0.3 2.1 1.4 0.3 1.1 0.7 75.7 0.0 0.0 0.0 0.0 99.6 0.3 6.7 5.9 0.9 5.0 0.8 0.7 1.0 34.1 17.2 3.2 14.0 16.9 0.3 1.2 1.2 1.2 0.7 0.5 41.5 0.6 2.6 2.5 1.5 1.0 0.1 78.5 1.9 4.0 3.3 1.7 1.6 0.7 62.4 2.8 5.7 2.1 0.3 1.8 3.6 13.2 0.4 2.5 2.5 1.6 0.9 0.0 80.6 0.2 0.8 0.3 0.1 0.2 0.5 90.5 27 A N N E x 2 S TAT i S T i C A L TA b L E S TAbLE A2.5 b MENA Exports by Products, as % of total Exports of Products, 2007 Table 3 as % of Manufactured Machinery Other manufactured total exports of goods (SiTC 5 to 8 Chemical products and transport goods (SiTC 6 + 8 iron and steel products less 667 and 68) (SiTC 5) equipment (SiTC 7) less 667 and 68) (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 28 S TAT i S T i C A L TA b L E S A N N E x 2 TAbLE A2.6 Concentration and Diversification indices of Export Products in MENA 1995 2007 Number of Concentration Diversification Number of Concentration Diversification Exporters products index index products index 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 statistics Concentration 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. 29 WORLD BANK MIDDLE EAST AND NORTH AFRICA REGION Economic Integration in the Mashreq