Abstract:
The Mediterranean Partnership initiative was launched by the European Union (EU) in 1994 to achieve deeper regional integration—particularly through developing an area of free trade and cooperation—among the countries of Europe, the Middle East, and North Africa. This paper addresses questions on the effect of a free trade agreement (FTA) with the EU on income distribution in Egypt. The paper asks how the FTA—interpreted here as a first step towards global integration—can help to redress negative distribution effects related to globalization, and thus facilitate the social transition towards a more open economy. It reviews initial conditions and past policies in Egypt; analyzes the effects of trade liberalization and globalization of capital markets on income distribution; and discusses policy interventions that may, with EU assistance, help reduce the negative impact of globalization.
