February 25, 2015
The African Development Bank (AfDB) has published a new economic paper on the Middle East and North Africa, entitled “Trade Volume and Economic Growth in the MENA Region: Goods or Services?”
In this paper, the African Development Bank underlines that the relatively high trade barriers in the region have a negative effect, not only on service trade, but also on the competitiveness of the manufacturing sector. This is even truer in the case of some services (transport and telecommunications, as well as financial services) that are complementary to goods production and exports.
Supported by figures and charts, this economic paper shows that liberalising trade policy and increasing trade volumes have stimulated economic growth in the region. However, the various obstacles and constraints that are holding service trade back considerably limit its effect on growth.
Other findings that prove to be even more problematic and which the study underlines include: most services provided by the public sector are inefficient and backbone services (including transport, telecommunications, and the storage and distribution of goods) are high in cost. Combined, these factors raise the cost of exports from countries in the MENA region (both services and manufactured goods), also impeding trade expansion.
Among other recommendations to boost trade in these countries and their exports, this new economic paper advocates the reform of regulatory procedures in order to reduce trade barriers. This would be to improve the operation of the services sector by: optimising the business environment and transport (air transport in particular), banking and financial services, the energy and tourism sectors and information technology and telecommunications. In a virtuous circle, the production of goods and services and investment (including foreign direct investment) would be stimulated – in addition to the so-sought for creation of jobs in this region with its high unemployment rates.
Source: All Africa