Abstract:
This paper examines the economic and political incentives for regional integration, focusing, from an Egyptian perspective, on whether the preferential trade agreements with the EU will stimulate trade liberalization in the Middle East and North Africa and serve to promote trade within the region itself, particularly with the Israeli/Palestinian/Jordanian triad. It also assesses current incentives and future prospects for regional integration.
The paper concludes that, in the short run, Egypt has limited economic and political incentives to integrate with the triad, or with the region. In the medium run, however, the prospects for regional integration are brighter. Egypt is about to sign a partnership agreement with the EU, and there is keen interest in attracting FDI. Both factors are expected to bring about deeper reforms at home and create pressure for regional integration to allow firms secure access to larger markets, to optimize locations across borders, and to capitalize on economies of scale.
