Question

1. What are the main factors attributable to the failures of the MENA in their quest to integrate regionally and globally?

Answer 1

The Middle East and North Africa (MENA) is an economically diverse region which includes countries with a shared heritage, at different stages of economic development and with vastly different natural resource endowments. Despite implementing structural reforms in many countries, and having significant success in preventing crises and maintaining macroeconomic stability, the economic output of the region has been below its potential in the past 30 years.

The MENA region had immensely benefited from the wealth generated in the 1970s by the sharp rise in oil prices. In other countries of the region, the boom of investment and development in the oil-exporting countries resonated with a rapid increase in workers' remittances, trade, and capital flows. While volatile, gross capital formation was sustained at extremely high levels, supporting a sharp rise in GDP growth levels and a huge increase in living standards. As national savings exceeded investment, significant financial assets were accumulated abroad , particularly in the oil-producing countries.

Economic performance in the area over the next 20 years, however, deteriorated as growth rates declined and the job opportunities sought by a rapidly growing workforce were not created. This deterioration of economic conditions brought impetus for economic reforms, which many countries pursued in the mid-to-late 1980s and early 1990s

In short, while sustaining macroeconomic stability, the MENA region as a whole has struggled to generate strong and sustained growth rates. Unlike other developing countries, the country has been underperforming since the 1970s, thereby failing to reap the full benefits of globalization and world economic integration.

The field faces formidable challenges. The economic output of the MENA countries remains below its potential, causing chronic unemployment and poor living conditions in large parts of the country. Countries in the area must achieve higher levels of economic growth and be more completely integrated into the global economy if they are to succeed in generating productive jobs for a increasingly growing population and, more broadly, reducing poverty and improve living standards.