The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
By establishing free trade for industrial products in 12 years, the European Union’s Association Agreements with countries in the Mediterranean region seek to promote accelerated economic growth. This paper reviews the literature and evaluates the economic benefits and costs for Tunisia, Morocco, Lebanon, Egypt, and Jordan. It concludes that the benefits could be substantial, but only if accompanied by deep supplementary reforms, including extending trade liberalization to services and agriculture and on a multilateral basis, improving the environment for foreign direct investment, ensuring an adequate fiscal and exchange rate policy response, and strengthening European Union assistance.