Econostrum | Economic News in the Mediterranean



Integration advances in the Mediterranean, but at a reduced speed

Economic integration in the Mediterranean region remains uneven (photo: ©
Economic integration in the Mediterranean region remains uneven (photo: ©
MEDITERRANEAN. Entrusted by the Union for the Mediterranean (UfM) to the Organisation for Economic Co-operation and Development (OECD), the publication of the first report on regional integration in the Mediterranean will serve as a basis for measuring its evolution. It is based on specific indicators covering five areas: trade, finance, infrastructure, movement of people and research and higher education. "It will be periodic and will allow us to go deeper into the understanding of all these issues," says Carlos Conde, head of the OECD's Middle East and Africa division.

This 198-page document, financed by the German cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit - GIZ), makes a preliminary observation that was taken up on Thursday 27 May 2021 by Nasser Kamel: "I had the impression that integration was not advancing, but it has increased in the region, even if progress remains slow and below the region's potential in terms of capacities and resources".

The UfM Secretary General also notes that "the situation has improved. The economies of the countries of the South, which ten or fifteen years ago were based on hydrocarbons and agriculture, have diversified to penetrate the economies of the North by exporting more semi-finished and finished products". He mentions Morocco and its automobile industry, and electromechanics in Egypt. A development also noted in South/South relations between Morocco and Egypt, and between the latter and Turkey.


The EU provides 95% of domestic exports

However, progress has been uneven. "In trade, for example, the countries of the Western Balkans and North Africa sub-regions have become more closely integrated with the rest of the UfM region, while the Levant (Lebanon, Palestine and Jordan) and Israel have fallen well short of their potential," the paper reveals.

Some figures mask realities. Thus, in 2018, UfM countries exported almost twice as many goods to other UfM countries as to the rest of the world and the intra-regional market, whose importance has remained relatively constant since 1996, represented more than 20% of world trade. However, this trade remains concentrated on the northern shore of the Mediterranean. The European Union accounts for more than 95% of internal exports of goods and 93% of external exports.

Beyond the findings, the report contains recommendations to advance regional integration. For Nasser Kamel, "the methodology applied is scientific, but oriented towards policies and measures to be taken by the Member States to fill the gaps". Carlos Conde speaks of "building a public policy architecture" and hopes that the leaders of Mediterranean countries will also ask themselves "what are the national conditions necessary to be able to integrate?"

Untapped business potential in the region

"Several policy initiatives by UfM countries are possible to unlock the untapped trade potential in the region, such as increased collaboration on trade regulations, including the adoption of more ambitious trade in services agreements, and the homogenisation of procedures, such as the adoption of common rules of origin. However, improving the overall trade environment, including access to transport and finance, may remain ineffective in the absence of industrial diversification," the report says.

Two handicaps still hamper integration: "insufficient transport infrastructure and energy connectivity and the lack of a common vision on human mobility as a driver of innovation and growth in the region". In 2020, the World Bank estimated that over the next five to ten years, the Mena region will need to invest more than 7% of its annual regional GDP in infrastructure maintenance and creation. Freight traffic between the countries of the Mena region accounts for only 5% of total freight traffic in the Mediterranean, while traffic between European ports is 70% and between Europe and North Africa it is only 15%.

"This report tells us that more needs to be done," emphasises Nasser Kamel, agreeing with Carlos Conde that "integration is the best political option".


Frédéric Dubessy

Thursday, May 27th 2021

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