Since the Arab Spring began in 2010, the Middle East North Africa region has had low economic growth. Although MENA has a relatively average GDP per capita compared with the rest of the world, this hides the vast inequality within countries and the variation between oil and non-oil countries in the region. One contributing factor to this is the low regional integration in MENA. Compared to other regions, the Middle East North Africa region not only has low regional integration with neighboring countries, but is also one of the least integrated in the world economy. MENA integration has been consistently increasing over time, but it remains far behind its potential. For example, while MENA is comprised of approximately 5.5% of the world’s population and 3.9% of the world’s GDP, MENA’s non-oil world trade, as of 2010, was only 1.8%. Moreover, during 2008 – 2010, MENA’s “intraregional exports of goods… averaged less than 8% of total exports,” while ASEAN averaged 25% and the EU averaged 66%.
There are several reasons for low regional integration in the MENA region. Political factors such as regime type, the lack of a hegemon, political instability and the organization of labor affect integration. Regimes with a highly centralized power center such as a dictator or monarchy are concerned only with staying in power. Integration would require giving up some sovereignty and would limit their ability to use any and all means to suppress domestic dissent. Dictators and monarchies often make instable regimes, especially with the onset of the Arab Spring, and thus, rulers are even less likely to enter into regional agreements with unstable partners. Lastly, labor is very constrained in MENA. In wealthy oil states, migrant laborers work for menial wages and, due to their migrant status, have no political rights or ways to organize. Organized labor is usually a driving force behind regional integration. If labor forces lack the ability to organize, then there is less incentive for governments to pursue an agenda that would limit their sovereignty. Unless laborers are granted more rights and governments began to listen to their people, there is no hope for regional integration in MENA.
Additionally, there are many economic factors that contribute to the lack of regional integration. In 2010, The World Bank again conducted a study on the lack of intraregional trade in MENA. The World Bank declared that some aspects of policy, such as public sector governance and participation, accountability and transparency, and rents and privileges, remained an obstacle to integration. The low levels of trade in the region are due partly to tariffs, but mostly to non-tariff issues such as include overvaluation of exchange rate, overregulation, labor restrictions, intellectual property rights, corruption, rules of origin, state intervention, and language and cultural barriers.
This low level of regional integration has contributed to the slow economic growth and high levels of unemployment in MENA. MENA has attempted to integrate several times over the past decades and has failed in almost every opportunity. Smaller regional agreements such as the one between the Gulf States and bilateral agreements have replaced an overall regional plan. The type of regime, corruption levels, and availability of oil in the region has led to concentrated wealth among the elite while the poor remain unemployed and unable to feed their families. Integrating the region will lead to lower levels of unemployment, higher wages, and more trade. While this is not the only way to help development and income inequality, it is one way to address these growing issues in the MENA region.