Policy Viewpoints

Arab Economic Integration between Hope and Reality

Publication Number: ECES-PVP12-E&A

October, 2002

Author : Ahmed Galal and Bernard Hoekman

Type : Policy Viewpoints

The Arab economic integration (AEI) project has been on the agenda of Arab politicians, intellectuals, and the public at large for some 50 years. During this period, several integration attempts have been made. The Arab League was created in 1945, providing a potential focal point for carrying out such a project. The driving force for AEI has been a belief, held by many, that the formation of a united Arab economic block would strengthen the bargaining power of the region in an increasingly polarized world and offer the population an opportunity for better standards of living. Fifty years later, the AEI project remains elusive. This contrasts with the European integration experiment, which began around the same time as the Arab project. The divergence in outcomes between the two experiments raises a host of questions. Were the expected economic gains from AEI so little as to preclude concrete and systematic actions toward integration, or was it an absence of political incentives? Did the region lack the institutional mechanisms to carry out the project, or was it opposition from interest groups within countries that prevented real progress to date? Looking ahead, are there any lessons to be drawn from the European Union (EU) experience for the Arab region, or are the two experiments so different that progress on the AEI front requires its own unique path? These are the broad questions addressed in this edition of Policy Viewpoint, which draws on the papers presented at the ECES conference held in October 2001. The rest of this edition provides an explanation of the results of past efforts at integration, an estimation of the expected benefits if integration is carried out, and the possible lessons from the EU experience for the Arab region. The concluding section outlines a recommended course of action.