Front Matter Page
Copyright ©2018 International Monetary Fund
Cataloging-in-Publication Data
IMF Library
Names: International Monetary Fund.
Title: Economic integration in the Maghreb – an untapped source of growth / prepared by the staff of the International Monetary Fund.
Other titles: Untapped source of growth.
Description: [Washington, DC] : International Monetary Fund, 2018. | Prepared by the Staff of the International Monetary Fund. | Includes bibliographical references. Identifiers: ISBN 9781484378373 (paper)
Subjects: LCSH: Africa, North—Economic integration. | Economic development—Africa, North.
Classification: LCC HC805.E26 2018
The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Publication orders may be placed online, by fax, or through the mail:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090, U.S.A.
Tel. (202) 623–7430 Fax: (202) 623–7201
E-mail: publications@imf.org
Front Matter Page
INTERNATIONAL MONETARY FUND
Middle East and Central Asia Department
Economic Integration in the Maghreb
An Untapped Source of Growth
An IMF staff team led by Alexei Kireyev, with Boaz Nandwa, Lorraine Ocampos, Babacar Sarr, Ramzy Al Amine, Allan Gregory Auclair, Yufei Cai, and Jean-François Dauphin
No. 19/01
Front Matter Page
Middle East and Central Asia Department
Economic Integration in the Maghreb
An Untapped Source of Growth
An IMF staff team led by Alexei Kireyev, with Boaz Nandwa, Lorraine Ocampos, Babacar Sarr, Ramzy Al Amine, Allan Gregory Auclair, Yufei Cai, and Jean-François Dauphin
INTERNATIONAL MONETARY FUND
Contents
Acknowledgments
Executive Summary
1. Introduction
2. Facts about the Maghreb’s Economic Relations
Trade Liberalization Initiatives
Trends in Maghreb Countries’ Global Trade
Intra-Maghreb Trade, Investment, Financial, and Labor Integration
Factors That May Explain the Shallow Intra-Maghreb Integration
3. The Benefits of Greater Integration
Why Greater Integration Would Make Sense
Regional Trade Potential
Potential Impact of Greater Integration on Growth
4. Joint Policy Objectives for the Maghreb
Annex 1. Intra-Maghreb Trade: Revealed Comparative Advantages
References
Boxes
1. Marrakesh Call to ACT NOW
2. Maghreb: JOINT Policy Objectives
Figures
1. Main Trade Agreements
2. Trade Indicators
3. Directions of Trade and Investment
4. Intraregional Trade Flows
5. Financial Integration
6. Trade Policy Indicators
7. Capital Flow Restrictions
8. Trade Diagnostics
9. Revealed Comparative Advantage, 2016
10. Potential for Intraregional Trade
11. Growth Gains from Trade Integration
12. Global Value Chains
Tables
1. Maghreb Region: Selected Economic Indicators
2. Trade Complementarity Index, 2016
Acknowledgments
This Departmental Paper was prepared by a staff team led by Alexei Kireyev, under the supervision of Jean-François Dauphin and guidance from Adnan Mazarei. The team included Boaz Nandwa, Lorraine Ocampos, and Babacar Sarr (all Middle East and Central Asia Department, IMF). Ramzy Al Amine, Allan Gregory Auclair, and Yufei Cai provided research assistance, and Ravaka Prevost and Geraldine Cruz assisted in production. The authors thank staff members from MCD and other IMF departments for their helpful comments and suggestions. The authors are also grateful to colleagues from the Communication Department for their assistance.
Executive Summary
Individual countries of the Maghreb have achieved substantial progress on trade but, as a region, they remain the least integrated in the world. The share of intraregional trade is less than 5 percent of Maghreb countries’ total trade, substantially lower than in all other regional trading blocs around the world.
Geopolitical considerations and restrictive economic policies have stifled regional integration. Economic policies have been guided by country-level considerations, with little attention to the region, and are not coordinated. Restrictions on trade and capital flows remain substantial and constrain regional integration for the private sector.
Greater integration among Maghreb countries makes sense on economic grounds. Integration would create a regional market of almost 100 million people with an average income of about $4,000 per capita in nominal terms and about $12,000 in purchasing-power-parity terms. This would make the region more attractive for foreign direct investment; reduce the costs of intraregional trade, capital, and labor movement; and increase efficiency of resource allocation. It would also make the Maghreb more resilient to exogenous shocks and market volatility.
Maghreb integration can play an important role in a strategy to promote higher growth in the region. Various estimates suggest that regional integration could contribute to raising growth in each Maghreb country by 1 percentage point on average in the long term. While strong domestic policies remain the main economic driver, intraregional trade may double as a result of integration and would support growth, increasing employment. Greater integration may lead to winners and losers within each country. Public policy would need to address potential dislocations.
To integrate, Maghreb countries would need to lower trade and investment barriers, and connect their infrastructure networks. Their efforts should focus on goods, services, and capital and labor market liberalization. Gradually eliminating barriers to intraregional trade, building regional infrastructure, and improving the business environment would boost trade within the Maghreb and help further integrate global value chains. Greater regional integration should be complementary to Maghreb countries’ global integration.
To advance faster from cooperation to integration, Maghreb governments need to set JOINT policy objectives:
Job creation through higher growth;
Openness of each country’s economic model;
Inclusiveness in the distribution of growth benefits;
Negotiation of a new regional integration agreement;
Trade regionally on a much larger scale as a means to achieve those objectives.