A13 - The Arab region and the GCC in tomorrow's trade

Summary

The Arab countries are heavily dependent on international trade for their prosperity – in fact the region is characterized by very high levels of openness to international trade, and has therefore a clear and very keen interest in the continuation of the process of progressive liberalization of global exchanges.

The image of the Arab economies as being closed and inclined to protectionism reflects old nationalist rhetoric and import-substitution policies, but is by now totally non-representative of reality.

The Arab country with the lowest openness to international trade (measured as imports + exports/GDP) is Sudan, where the openness indicator takes a value of 43. In comparison, the USA has a degree of openness of 27 and Japan of 31: even Sudan is more open than either of the two. All other Arab economies have greater openness, topped by the United Arab Emirates with a very high level of 159.

The stereotype according to which the Arab economies are relatively closed and protectionist dates back to the period of Arab nationalism, when it was felt that pursuing regional integration between the Arab countries would open the door to industrialization and reduce dependence on the outside world. It would also open the door to political unification and the rebirth of the Arab nation.

But the Arab region is not the same as Germany in the nineteenth century. The Arab region is structurally extroverted, because it is huge by geographical extension and sparsely populated – two features that discourage the intensification of intra-regional trade.