The Law and Economics of Regional and Global Integration : An Empirical Analysis on the Middle East and North Africa (MENA)

Abstract

Benchmarking with other regions of the world, MENA is considered as one of the least globally and regionally integrated regions of the world. Home to 5.5 percent of the world’s population while having 3.9 percent of the world’s gross domestic products (GDP), the region’s share of non-oil world trade is only 1.8 percent. How can a new social contract along with the processes of institutionalization and deeper integration change the current status for the region towards further and more effective contribution to the global economy? Designed in three distinct yet interrelated Parts, this dissertation is to answer this pivotal question with its main attempt to establish that economic integration—regionally and globally—can make an important contribution to growth, job creation, and poverty reduction within the MENA region provided that some major efforts would be focused on institution-formation within the national and regional contexts in an enabling peaceful environment away from regional conflicts. Hence, as the first step to deeper regional integration, such regional conflicts and civil wars need to be settled within a cooperative environment involving the major powers of the region. Secondly, the theory of institutional change along with social contract theory have been suggested at the core theoretical part of this dissertation aimed at establishing the rule of law, well-defined property rights, good democratic polity while bringing more freedoms along with individual and citizenry rights into the socio-political and economic spheres which together can bring about the necessary voice and accountability to the citizens and the governments respectively. Traditional economic analysis based on institutional economics blended with empirical economic surveys and scientific findings on economic structure of the MENA region as well as comparative analysis of institutions constitute the core part of the methodology for this thesis. Along with this methodology, a correlation-tringle is established among the three important factors namely integration, institutions, and social contract that together bring sustainable development with freedom and stronger role for individuals as well as those of private sectors. It is suggested that the countries of the MENA region can expand such progress through regional cooperation and deeper integration processes. In other words, adequate institutions and proper social contract may serve as two pivotal pillars for a successful regional integration which in turn can reward such national efforts. The thesis stresses that institutions greatly matter for economic integration processes. With better policies, adequate strategies, and inclusive institutions, a desirable growth and sustainable development can be attained in the MENA region. Last but not least; studying legal aspects of economic integration in different regions of the world including the EU, MERCOSUR and NAFTA, ASEAN, and AFRICA as all explained in Part (II) render valuable lessons and experiences along with more lessons that can be learned by success and failure stories of countries within the MENA region (Chapter 9). Such historically evolved models can also help achieve a successful model for the MENA region as expounded through this dissertation. To achieve such economic success, and inclusive growth within a regional context; building infrastructures, fostering diversification away from the curse of natural resources while attracting FDIs are of paramount importance. Moreover, PTAs coupled with behind-the-border trade facilitation as well as logistic services are also crucial along with deeper integration to be aligned with the global value chains. To attain that success, it is important to have the regional integration processes as complementary to the process of global integration and vice versa.