BUS613: Advanced International Business

Backbone services such as telecommunications, transport, and power are crucial to productivity and international competitiveness. Opening these sectors to competition and trade can help reduce production costs, increase FDI, promote knowledge spillovers, and expand markets, all of which enhance competitiveness. It is estimated that trade costs can constitute 20 to 40 %of the final delivered price of MENA's nonoil exports. The cost of trade between neighbors is typically twice as high for MENA countries as in Western Europe. Maghreb countries face lower trade costs when trading with Europe than with each other. MENA's trade costs are consistently higher for agricultural products, reflecting high transportation costs (per unit value), time sensitivity for perishable products, and the impact of border controls and nontariff measures. Although some MENA countries, like the UAE, have excellent logistics facilities, most require substantial improvements in logistics and trade facilitation to decrease the cost of cross-border trading. 

Efficient ports, maritime, and aviation services are crucial for the competitive export of goods. Most MENA countries have extensive road networks with high capacity in some areas, as well as important facilities for air and sea transport and, in several cases, a sizable rail network. Yet the quality of transport infrastructure is often deficient and unable to support modern economies. Implementation of the Mashreq Corridor Program to remove cross-border constraints is to increase trade by US$ 15 billion per year by 2020 while generating some 250,000 permanent jobs. These jobs will mostly be in export-oriented light manufacturing that have a higher-than-average share of female jobs. 

Economic integration in the power sector is at an early stage of development. Initiatives, such as the North Africa–Middle East–Europe Mediterranean Power Pool, are taking shape, though much remains to be done to introduce competition in the power sector. Considerable progress has been made in regional integration of mobile telephony, but there are many important crossborder issues still to be tackled, particularly with regard to fixed and mobile broadband infrastructure.