Download Chapter 7

Macro-Economic Issues(B)
R&W Chapters 7-9, 13
plus pp. 133-142 of 5
Link to Syllabus
Link to WDI
Tariffs and Trade Policy
Unweighted Import Tariff Rates-Regions
SAR: South Asia, SSA: Sub.Sah. Africa, ECA: East Asia
Source: World Bank: Trade Investment and Development in MENA Figure 3.1
Theory of Tariffs
A tariff is a tax on imports, whose economic effects are to raise
the domestic price, increase domestic production, and lower imports.
Standard theory says tariffs are harmful because they lead to an
inefficient production. They also have secondary negative effects on
other production, such as exported products.
The famous argument in favor of tariffs is called infant industry, in
which activities are protected for a while, as they grow and mature.
This is quite controversial: Japan and Korea can be cited in favor,
while there are many negative examples, in MENA and elsewhere.
Perhaps it worked in Turkey, although that country has liberalized.
The ‘average’ tariff is difficult to measure.
Trade Policy
Indicators
MENA behind LAC and East Asia
Source: Dasgupta et al.
Reform and Elusive
Growth in the Middle
East…
Simple
Average
Weighted
Average
MENA
Standard
Deviation
Tariffs
ECA4 – Central
Europe & Turkey
EAP5 – East Asia
Source: World Bank
Trade, Inv. and
Development
Long Term Trends in Trade Integration: World and MENA
Source: World Bank: Trade Investment and Development in MENA Figure 2.2
Intra-Industry Trade Ratio in MENA
Index for all manufactures, in
1988 and 2000.
Higher numbers indicate more
integrated trade.
MENA has low levels.
Source: World Bank: Trade Investment
and Development in MENA Figure 2.7 p. 81
Export Diversification of MENA (late 1990s)
The smaller the number, the more diversified
Inter-regional trade among ESCWA
Manufactured Exports as % of Total
Exports,
by Region
Mfg Exports/Total
100
East Asia & Pacific
80
High income: OECD
60
Latin America &
Caribbean
40
Middle East & North
Africa
South Asia
20
Sub-Saharan Africa
MENA
0
1960
1970
1980
1990
2000
2010
Manufactured Exports as % of Each
Country's Total Exports
Algeria
Mfg Exports/Total - MENA
100
Egypt, Arab Rep.
Iran, Islamic Rep.
Iraq
80
Turkey
Israel
Tunisia
Jordan
Moroc
60
Israel
Jordan
Kuwait
Lebanon
Libya
Morocco
40
Oman
Qatar
Saudi Arabia
20
Syrian Arab Republic
Tunisia
0
1960
Turkey
1970
1980
1990
2000
2010
United Arab Emirates
Yemen, Rep.
Source: WDI
(fewer countries on the next slide)
Manufactured Exports as % of Total Exports
(simplified)
Mfg Exports/Total
– MENA - shorter
100
Egypt, Arab Rep.
80
Israel
Jordan
60
Lebanon
Morocco
40
Tunisia
20
0
1960
Turkey
1970
1980
1990
2000
2010
World Market Share of Textiles and Garments
MENA is way
behind.
Source: World Bank: Trade Investment and Development in MENA Figure 1.7
Share of World Exports of Services: MENA and Other Regions
Source: World Bank: Trade Investment and Development in MENA Figure 2.10
Free Trade Agreements Involving MENA Countries
Israel
USA
1985
Israel
\
EU
Turkey
Egypt
Jordan
GCC
EU
Turkey
Egypt
Jordan
GCC
Algeria
2001
x
x
\
?
EUAA
\
x
Moroc
Tun
Leb
Libya
2006
Bahr
x
Oman
x
2004
x
EUAA
EUAA
EUAA
x
x
x
No!
\
\
x
x
x
x
x
Most MENA countries are members of the World Trade Organization: Algeria, Iraq, Iran,
Lebanon, Libya, and Yemen are negotiating accession, and only Syria is not actively seek
Jordan also has FTA type agreements with Syria, Kuwait, and Singapore.
Israel has FTAs with U.S., Canada, Mexico, and several other countries
Turkey and the EU have an agreement which involves significant reduction of tariffs
(everything but agriculture), but does not include Turkey’s membership in the EU
EUAA – Association Agreement to the European Union–Mediterranean FTA - is a
proto-FTA of the EU with the Mediterranean countries, also involving foreign aid,
investment regulations, and similar arrangements.
The Greater Arab Free Trade Area (1997) is a work in progress.
Merkel to repeat offer to Turkey of EU
"privileged partnership"
Deutsche Press-Agentur - Sunday, March 21, 2010
Eds: Merkel to visit Turkey on March 29-30
Berlin (dpa) - German Chancellor Angela Merkel will offer Turkey
alternatives to full European Union (EU) membership during a visit to
Turkey later this month, she said in a media interview on Sunday.
"I am of the opinion that we should rather aim for a privileged partnership,
in other words a very close affiliation of Turkey to the European Union,“
Merkel told Deutschlandfunk radio.
Turkey has previously rejected similar statements by the German chancell
calling them "unacceptable." Progress has been sluggish on Turkish EU
accession talks, which began in 2005.
Merkel 's two-day visit to Turkey begins March 29. Her trip will focus on
Euro-Med Agreements: WB
Source: WB (2003)
Trade and Investment
pp. 208-209
Jordan Times on Vietnamese Women’s Strike in Jordan:
March 2008
Link to article
Link to site on QIZ’s http://www.jordanecb.org/investment_qiz.shtm
Jordan Times: March 5, 2008
QIZ Vietnamese workers refuse to end strike
By Hani Hazaimeh
SAHAB - A total of 176 Vietnamese women at a Taiwanese-owned
apparel manufacturing company in Al Tajamouat Industrial Estate are still
on strike demanding a pay increase.
Upon the work stoppage on February 10, the workers linked their return to a W&D Apparel Corporation’s
consent to increase their monthly salary from $175 to $265 per month and a basic eight-hour workday. The
factory owner said the demand contradicts employment contracts they had signed.
He accused some strikers of exercising violence and sabotage.
“When the company refused to meet their conditions, they started rioting and sabotaged some of the
company’s properties. The management had no choice but to call police to restore order,” James Shen, W&D
general manager, told The Jordan Times yesterday.
“Some of the strikers stole mechanical parts from sewing machines to prevent the company from hiring other
workers to replace them,” he charged.
He added that the management has met with 10 representatives of the strikers, but the two sides reached no
agreement although the managers offered some “compensation”. He explained that the financial
compensation was paid for those who had worked overtime hours and were the most productive.
“Those were satisfied with the compensation and wanted to go back to work. But those who did not get
compensation threatened them,” Shen claimed.
Thirty-year-old Di Thi Wei, one of the workers, upheld his claim.
She told The Jordan Times that she accepted the compensation and decided to go back to work despite the
strike leaders’ threats. “The company moved us to a different place to protect us from being assaulted by the
strike leaders,” she added. Di Thi was one of the 85 women who resumed work, said the general manager,
Qualifying Industrial Zones – QIZ's Israeli Min of Industry
http://www.tamas.gov.il/NR/exeres/2124E799-4876-40EF-831C-6410830D8F02.htm
Background on Qualifying Industrial Zones (QIZ's)
In 1996, U.S Congress authorized designation of qualifying industrial
zones (QIZ's) between Israel and Jordan, and Israel and Egypt. The
QIZ's allow Egypt and Jordan to export products to the United States
duty-free if the products contain inputs from Israel (8% in the IsraeliJordanians QIZ agreement, 11.7% in the Israeli-Egyptian QIZ
agreement). The purpose of this trade initiative has been to support the
prosperity and stability in the Middle East by encouraging regional
economic integration.
In order for a QIZ article to gain duty-free entry, QIZ factories must
add at least 35 percent to the value of the article. This 35 percent
minimum content figure can include value added in Israel,
Egypt/Jordan, or the United States. QIZs must encompass portions of
Egypt/Jordan and Israel, though the areas do not have to be
contiguous.
The immediate saving for an investor in the QIZ is the amount of the
Data from Kandeel: Arab Studies Quarterly 2008
End of 2006, 54,062 people were employed in Jordan’s QIZ.
31% of them were Jordanians.
Total labor force in Jordan was 1,900,000.
So QIZs employed 1% of Jordanians.
Foreign Investment
Distinguish between Foreign Direct Investment (FDI) which provides
foreigners with control, compared to Portfolio Investment (loans and
non-controlling stock investments) which do not.
Since around 1960, more money goes overseas as Portfolio investment
than as FDI.
Either of these terms can be ‘inward’ or ‘outward.’
US: International Investments/GDP
175
150
125
100
Overseas FI/GDP
Overseas FDI/GDP
Inwards FI/GDP
IFDI/GDP
75
50
25
0
1976
1981
1986
1991
1996
2001
2006
US is a net importer of portfolio capital,
and a net exporter of FDI.
Data source: US DoC
Debt Data
Table 8.2 p. 214. External Debt, 1994 and 2004
MENA: Debt/GDP
250
Debt/GDP
Egypt
Jordan
200
Jordan
Syria
Lebanon
Percent
150
Morocco
100
Syria
Egypt
Tunisia
50
Turkey
Lebanon
0
1970
1975
Data source: WDI
1980
1985
Year
1990
1995
2000
2005
Gulf Currency Union
Gulf Currency Union
Saudi Arabia, Kuwait, Qatar, Bahrain: UAE? Oman?
The most important example of a currency union is the euro in the EMS.
Monetary integration is feasible if the countries have similar rates of inflation, and
presumably would be implemented after the countries had maintained fixed
exchange rates among themselves. (Theory is called ‘optimum currency area.’)
The Gulf countries have relatively free capital markets, effectively free trade, and
fixed exchange rates (except Kuwait).
One aspect of a GCC Currency Union would be a complete integration of capital
markets – stock markets and investment banking. Also, no transactions commissions.
A major drawback of monetary integration is that it reduces the economic
independence of the individual countries. In the Gulf, it would accentuate
dependence on Saudi Arabia. One also wonders about the Sovereign Wealth Funds.
Other reasons given for non-agreement in the GCC: location of the bank; the issue of
pegging to the dollar, a basket ($, ¥, £, €), or floating.
Currency Union
Timing
Europe
Gulf Countries
Solidification of exchange rates began in 1970s, Euro
Planned for 2010.
successfully introduced early 2000s
Membership
European Union, minus U.K., Sweden, Denmark. New
Bahrain, Kuwait, Qatar, Saudi Arabia, U.A.E. Oman was initially to
countries trickling in.
be included, Yemen is just wishful; UAE currently not interested.
Benefits: Economic. A common currency will reduce transaction costs and thereby stimulate trade among members, tourism and other services –
especially financial transactions. It is often asserted that economic integration (at any level) will encourage fiscal constraint and more
competitivity.
Costs: Economic. A common currency eliminates the possibility of an independent monetary policy. It may also discourage independent fiscal policy,
forcing similar budget situations.
Theory is called Optimum Currency Areas. Originated with Robert Mundell; another major contributor was R. Dornbusch.
Qualifications: Countries should join to minimize exchanger costs of adjustment, namely, if their economies have similar causes of fluctuations. Factors
contributing to this are: similar export and import products, similar inflation rates, similar interest rates, as well as longer term factors such as
similar technological change.
Preparation:
Customs union formed in 1957, Maastricht accords in
Minimal tariffs for some years. One wonders if industrial efforts will
early 1990s.
interfere.
Export products
Very large variety. Note that UK and Denmark are
Opposite: mostly hydrocarbons.
hydrocarbon exporters, and have stayed out.
Imports
Very large variety, although hydrocarbons affect them
Only Saudi Arabia has any credible manufacturing or agriculture.
differently.
These countries do very little trade amongst themselves.
Capital Account
Was mostly liberalized
Very few limitations. A further consideration is the amount of funds
overseas (sovereign wealth funds, individual investments). Some
argue that an important benefit will be the rationalization of local
equity markets.
Exchange Rates
Gradual rigidification during 1980s and 1990s
B., Q, SA, and UAE have fixed to the US $ for many years. Kuwait
has floated.
There is an additional question of whether the new currency will
float or be pegged (to $ or Euro)
Inflation
Maastricht convergence criteria guaranteed minimal
Inflation rates have been small and similar. Many argue that Fixed
differences.
Rates imply importing US inflation rates.
Unemployment
There seem to be different ‘natural’ rates of
All these countries import labor, so unemployment itself cannot be
unemployment, all higher than that of US.
the issue, although there is frictional U.
Political Issues
Many see this as a step towards further unification, on the Difficult to make any sense of this, given Saudi’s history of
American model. In the background is interest in how
expansionism. More recently, there have been clear differences
Europe will react to the financial crisis imported from the between Saudis and Qataris, and UAE is clearly not politically
US.
unified.
Central Bank
Located in Frankfurt, near the center of the EU, inside its Not known where it will be located, although one reads of
most powerful economy.
decentralization of its offices across countries.
/GCC_Union.doc
CPI Inflation, Annual Percent
14
Inflation in GCC
12
Bahrain
10
Kuwait
8
Oman
6
Qatar
4
Saudi Arabia
2
0
1990
1995
2000
2005
2010
Inflation: GDP Deflator
Bahrain
40
Kuwait
30
Oman
20
Qatar
10
0
1990
-10
Saudi Arabia
1995
2000
2005
2010
United Arab
Sovereign Wealth Funds
“Government Owned” purchases of financial instruments in other
countries.
Implications:
Reduce domestic inflation
Spread out bonanza from oil or other raw material
Reduce domestic instability caused by unstable world prices
Puts these countries ‘on the map’ of international finance
Indicates that these countries are growing more sophisticated in their
economic policy (while US and Europe are declining in our ability
to throw our weight around)
Foreign Assets/GDP: Oil Exporters, 2007 (Data in billion US$)
Overseas
Assets
GDP
Ratio
UAE
900
187
4.8
Saudi Arabia
600
372
1.6
Kuwait
300
109
2.8
Qatar
100
62
1.6
This Ratio for Norway would be 1.1 – 1.5.
Sources: Estimates on overseas assets – referring to 2007-, from Setser and Ziemba, “Understanding the New
Financial Superpower- The Management of GCC Official Foreign Assets,” RGE Monitor Dec. 2007.
GDP estimates (for 2007) from EIU Monthly Reports.
Link to Sovereign Wealth Fund Institute online www.swfinstitute.org
Size of SWFs
Saudi Arabia
(SAMA) ~ $400b
Source: Legrenzi and
Momani (2011)
Shifting Geo-Economic
Power of the Gulf
SWF Strategy and Transparency
Accumulated Stocks of FI for Oil Exporters. (Stocks as % of GDP)
Algeria
Iran
50
40
40
OFDI/GDP
20
30
OFDI/GDP
IFDI/GDP
0
1960 1970 1980 1990 2000
20
Financial
Account/GDP
10
Financial/GDP
-20
0
1960
1970
1980
1990
2000
IFDI/GDP
-40
Kuwait
Saudi Arabia
OFDI/GDP
50
0
1960
-50
50
IFDI/GDP
1970
1980
1990
2000
Financial/GDP
-100
-150
-200
-250
Net Financial
Assets(inverted/
GDP
Financial
Assets(inverted)
/GDP
Financial
Liabilities/GDP
25
0
1960
-25
-50
-75
-100
OFDI/GDP
1970
1980
1990
2000
IFDI/GDP
Financial
Account/GDP
Foreign Direct Investment
Quick Review of Theory of Foreign Investment
Distinguish Direct Investment (control) from Portfolio Investment (Loans)
Direct Investment because of special advantage of Investing Company:
Technology, Trademark/Patent, Operational practice,
Access to credit or external markets, protection of home country
Attraction of country: low wages, availability of resources, tax benefits,
access to market
Profit rates, wages, import reliance, etc. will be higher for FDI company
Benefits will decline over time (product cycle)
FDI will be either market seeking or resource seeking.
This theory is an alternative to the theory that FDI seeks to exploit.
Share of FDI Inflows p. 182
Source: World Bank (2004) Unlocking the Employment Potential in the MENA page 182
FDI Potential
Source: World Bank: Trade Investment
and Development in MENA Figure 1.18
Openness to FDI in Services, by Regions, 2004.
Closed
West
Asia
(MENA)
East
Asia
Open
SE
ASIA
Source: UNCTAD World Investment Report, 2007
South
America
Central and
Eastern
Europe
IFDI/GDP - MENA Countries
120
100
80
60
40
20
0
1950
1960
1970
1980
Source: WDI, in OPECFDIRev2.xls
1990
2000
Algeria
Bahrain
Iran
Iraq
Kuwait
Libya
Oman
Qatar
Saudi Arabia
UAE
IDP
Source: UNCTAD: World Investment Report, 2006
Recent FDI From West Asia
From Kuwait and UAE, to Turkey, Saudi A, and UAE
Source: UNCTAD World Investment Report, 2007
West Asia: M&As, by Sector
Mostly in
Services!
Source: UNCTAD World Investment Report, 2007
Turkey’s FDI
in Egypt
Link to article
(or, next slide)
Turkey Sets Up Its First Industrial Park in Egypt
CAIRO: After signing a free trade agreement in 2005 that was
dubbed “a turning point in relations between two regional
powers,” it was only a matter of time before Turkey established its first private
industrial park in Egypt.
Turkish President Abdullah Gul inaugurated Wednesday “The Polaris” industrial
park, the first of its kind in Egypt, with investments totaling $1.5 billion.
The private industrial park is a joint venture between the two countries that is
estimated to attract $4 billion of investments in the next four years.
“Trade ties between the two countries have already been on the rise since
[ratification] of the FTA,” said Minister of Trade and Industry Rachid Mohamed
Rachid in a press statement.
“The majority of Turkish investments in Egypt seek to export to foreign markets,
especially in Europe, the Middle East and Africa, as well as benefit from partnership
agreements between Egypt and Europe, allowing preferential advantage of products
manufactured in Egypt to enter these markets without customs,” he added.
Sprawling two million square meters in the Sixth of October City — an area fit to
host some 300 companies and factories — the cluster will include Turkish
manufacturing operations from a number of sectors including textile and ready-
Saudi investors demand their $12 billion invested
in Egypt be protected
Author: Egypt Independent March 17, 2012
Saudi businessmen have said that Egypt has responded positively to
demands that their investments in the country be protected, reported
Saudi paper Al-Eqtisadiah on Saturday.
Saudi investments in Egypt are estimated as being worth around
US$12 billion, of which $4 billion worth are facing major problems,
the paper said.
It quoted a Saudi businessman in Egypt as saying that during an
upcoming meeting between the Saudi-Egyptian Business Council and
the Egyptian People's Assembly speaker, the investors will list their
grievances and the rights they have been deprived of without
compensation since the Egyptian uprising began.
Privatization, and
Equity Market Reform
Privatization Proceeds
Source: Dasgupta et al., Reform and Elusive Growth in the Middle East…
Cumulative Privatization Proceeds/GDP (%), 1988-2003
Egypt
6
Qatar
3
Jordan
11
Saudi A.
2
Lebanon
1
Tunisia
4
Morocco
19
Turkey
3
Oman
3
Positive but < 0.5 Algeria, Bahrain, Iran
UAE, Yemen. Presumably zero
elsewhere (e.g. Libya, Syria).
Source: Privatization proceeds from WB Privatization database http://rru.worldbank.org/Privatization/;
GDP from WDI
Stock Market data
Source: Neaime (2006) Thunderbird Review
Market Capitalization/GDP
Egypt, Arab Rep.
Market
Capitalization/GDP
US
1000
Jordan
Iran, Islamic Rep.
Israel
Jordan
Kuwait
100
Lebanon
Morocco
Oman
Qatar
10
Saudi Arabia
Tunisia
1
1985
Iran
1990
1995
Lebanon
2000
Turkey
2005
2010
United Arab Emirates
United States
Source: WDI. Missing are data from Algeria, Iraq, Syria, Yemen
Syria Finds Right Ingredients to Start a Stock Market From Scratch
April 2, 2009
New York Times/Damascus Journal
By ROBERT F. WORTH
DAMASCUS, Syria — “A different Syria, a good Syria,” say the huge, glossy
Billboards that have begun appearing all over this city.
The signs are not about political reform, or this country’s much-touted re-engagement
with the West. Instead, they are advertisements for the new Damascus Securities
Exchange, which opened last month on a hillside on the edge of town.
It may seem a little quixotic to open a stock exchange in the middle of the worst
global financial crisis in decades. For the moment, it looks more like a sleepy college
library than a booming bourse, with trading — indirectly controlled by the government —
only five hours a week and share price fluctuations limited to 2 percent per day.
There are only six stocks on the market, and in the first weeks, only one was traded.
But for many Syrians, the fledgling exchange represents a long-deferred dream of
economic liberalization and prosperity after decades of socialism and isolation.
Telecommunications Liberalization in MENA
Source: World Bank: Trade Investment and Development in MENA Figure 5.6
Incidence of Energy Subsidies in Iran, Urban vs. Rural p.64
Source: World Bank/Farrukh Iqbal (2006) Sustaining Gains in Poverty Reduction MENA page 64
Defense and Armaments
Chapter 13 of R&W
MENA Military Expenditures. Table 13.2 p. 352.
See next slide.
World Defense Expenditures, 1999
(US$ billion)
(US$ million)
(US$mill)
World
852
Algeria
1,830
Oman
1,780
W. Europe
188
Egypt
2,390
Qatar
1,060
Middle East
55
Iran
6,880
Saudi A.
21,200
Africa
20
Iraq
1,250
Syria
China
89
Israel
8,700
Tunisia
357
India
11
Kuwait
2,690
Turkey
9,950
Russia
35
Lebanon
653
UAE
2,180
281
Morocco
1,450
USA
Source: US Arms Control and Disarmament Agency,
World Military Expenditures and Arms Transfers 1999-2000
Yemen
4,450
374
R&W Fig. 13.2 p. 353. Military Spending in MENA, 2000s
U.S. military spending is listed as $518 billion.
Military Spending as % of GDP. Fig. 13-1 p. 350.
As a region, MENA
has highest ratio.
Slight decline between
1993 and 2004 for all
countries.
Military Expend/GDP, Regions
Defense Expenditures/GDP, Regions
5
4.5
Middle East & North
Africa
4
East Asia & Pacific
3.5
3
Latin America &
Caribbean
2.5
South Asia
2
Sub-Saharan Africa
1.5
1
High income: OECD
0.5
0
1985
Source: WDI
1990
1995
2000
2005
2010
R&W Table 13.1 p. 351. Relative Weight of MENA Military
MENA: Military Expend/GDP (%)
MENA: Military Expenditure/GDP, %Algeria
20
Bahrain
Egypt, Arab Rep.
Iran, Islamic Rep.
Israel
15
Jordan
Kuwait
Lebanon
10
Libya
Morocco
Oman
5
Saudi Arabia
Syrian Arab Republic
Tunisia
0
1985
1990
1995
2000
2005
2010
United Arab Emirates
Yemen, Rep.
General trend towards a decline. High in Saudi, Kuwait, Oman, Israel, Jordan.
Lower in Tunisia, Iran, Algeria
Source: WDI (2006)
MENA: Military Expend/Gov't (% )
MENA: Military Expenditure/Gov’t
60
Algeria
Bahrain
UAE
50
Egypt, Arab Rep.
Oman
Iran, Islamic Rep.
Jordan
Jordan
Israel
40
Kuwait
30
Lebanon
Iran
Morocco
20
Oman
Tunisia
Turkey
Turkey
10
United Arab Emirates
Yemen, Rep.
0
1985
Source: WDI
1990
1995
2000
2005
2010
Article on $60b arms sale to Saudi Arabia: NYT Sept. 18, 2010
Obama Is Said to Be Preparing to Seek Approval on Saudi Arms
Sale.
President Obama is preparing to seek Congressional approval for a huge arms sale to
Saudi Arabia, chiefly intended as a building block for Middle East regional defenses to
box in Iran, according to administration and Pentagon officials.
The advanced jet fighters and helicopters for Saudi Arabia, long a leading customer for
these weapons, could become the largest arms deal in American history, and one
significant enough to shift the region’s balance of power over the course of a decade.
The key element of the sale would be scores of new F-15 combat aircraft, along with
more than 175 attack and troop-transport helicopters and, if subsequent negotiations are
successful, ships and antimissile defenses. The deal has been put together in quiet
consultations with Israel, which has sought assurances that it will retain its
technological edge over Saudi forces, even as Saudi Arabia improves its ability to face
down a shared rival, the Iranians.
Tech. Composition of exports of Lebanon and other
MENA
Trade to GDP Ratios in MENA
Hirschman Export Concentration Index
LAC-Latin America, EAP5 East Asia, ECA3 Europe.
Tourism/GDP: MENA and Other Regions
Source: World Bank: Trade Investment and Development in MENA Figure 2.8
Bush kicks off new round of free-trade talks in the Middle East
U.S. president seeks to create FTAs with every nation in the region by
2013
By Agence France Presse (AFP)
Compiled by Daily Star staff
Friday, March 11, 2005
The Bush administration, seeking to provide economic support for its
efforts to spread democracy in the Middle East, launched a new round of
free-trade talks in the region this week while an Egyptian official said
Wednesday he believed his country's own negotiations with the United
States would start soon. Egyptian Trade Minister Rashid Mohammed
Rashid described his meeting in Washington with Acting U.S. Trade
Representative Peter Allgeier in optimistic terms, saying he was hopeful
that free-trade talks with the United States would begin "in the near
future." "We do not have a specific date for when we can start negotiation
of an FTA (Free Trade Agreement). But we are both moving on the right
Tax rates
Source: Dasgupta et al.,
Reform and Elusive Growth
in the Middle East…
Class
Composition
in Iran,
1976-2006
Source: Behdad and Nomani (2009) “What a Revolution! Thirty Years of Social Class Reshuffling in Iran,”
Comparative Studies of South Asia, Africa and the Middle East 29:1
Other Fiscal Issues
MENA: Gov’t Fiscal Balance
Source: World Bank (2006) Economic Development and Prospects: Financial Markets in a New Age of Oil page 112
Food Subsidy Costs p. 60
Source: World Bank/Farrukh Iqbal (2006) Sustaining Gains in Poverty Reduction…MENA page 60
Relative size of Military Expenditures
Source: Cordesman (2004) Military Balance in the Middle East
Decline of Real Military
Deliveries, 1985-1999
Would seem to be US aid.
Source: Cordesman (2004)
Military Balance in the Middle East
Excerpt from US Embassy Site on Jordan FTA http://usembassy-amman.org.jo/QIIZ.htm
QUALIFYING A PRODUCT
Q: How does the FTA affect the Qualified Industrial Zone (QIZ) initiative?
A: The FTA does not supersede or eliminate the QIZ initiative. The QIZ initiative
currently grants immediate tariff and quota-free access to the U.S. market to goods
that are produced in the QIZ’s and meet specific rules of origin requirements. Under
the FTA, tariffs and quotas for many goods are phased out over time, and rules of
origin require 35% Jordanian content. Thus for some high-tariff goods, producing in
QIZ’s will retain an advantage.
For instance, many apparel goods face U.S. tariffs of up to 30%. Under the FTA,
tariffs on these goods would be reduced over ten years, and Jordanian exports would
have to meet the 35% Jordanian content level. Under the QIZ initiative, those same
goods would enjoy immediate elimination of tariffs and quotas, and would require a
lower level of Jordanian inputs. Thus in this case, QIZ-produced products would
enjoy a comparative advantage.
Q: Who qualifies products for duty free entry in the United States? What
information is required?
A: A committee consisting of Jordanian and Israeli government officials determines
whether products are eligible for duty-free treatment. The manufacturer must provide
detailed information about the costs of materials and labor to prove that the product
Morocco: Employment Growth and Manufactured
Exports
Source: World Bank: Trade Investment and Development in MENA Figure 1.23
US-Jordan FTA: WB
Source: WB (2003) Trade and Investment p. 208
Link to discussion of QIZs and FTA with US
Click
http://www.tamas.gov.il/NR/exeres/2124E799-4876-40EF-831C-6410830D8F02.htm
Link to data on Recent FDI into MENA
Link http://wwwpersonal.umd.umich.edu/~mtwomey/econhelp/344files/Table18%20International%20Finance
.doc
Link to FDI Table 17: 20th Century FDI in MENA
Link http://www-personal.umd.umich.edu/~mtwomey/econhelp/344files/Table17EarlyFI.doc