CIAO DATE: 06/02

Harnessing Trade for Development and Growth in the Middle East

Introduction

This timely report from the Council on Foreign Relations highlights the central role of trade in the future prosperity of countries in the Middle East and North Africa (MENA).

The economic performance of many of the countries in the region during the past quarter- or half-century has been disappointing, despite the advantage of great oil wealth. One important explanation is the failure to develop links with the global economy through foreign investment and trade in services and goods other than oil. A second reason is that most of the governments in the Middle East and North Africa have made scant headway in reducing the interventionist role of the state in the economy.

The crucial message here is that greater openness to trade and domestic economic reforms can mutually reinforce each other to generate faster growth, lower unemployment, and higher standards of living. If a new round of global trade negotiation under the auspices of the World Trade Organization heralds a new period of trade liberalization, as we must all hope, it can provide exactly the right opportunity for governments in the region to jump-start this reform process.

Regardless of the precise world economic environment, however, the fundamental point is that all examples of successful economic development have involved the harnessing of trade. I hope that this report provides a blueprint for the Middle East and North Africa to win enormous potential benefits from trade policy reform.

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