How trade integration in South East Asia can inspire North Africa

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In its latest economic publication AfDB underlines once again the paradox that, despite its long history, and its geographical, cultural, religious and linguistic ties, North Africa suffers from a lack of integration. This situation is often explained by the similarity of economic structures and the dissimilarity of the production systems of the countries in the region.

In reviewing the experience of ASEAN (Association of the Nations of South East Asia), the publication insists that the dynamics of regional trade rely on trade within the same industries, and not on the specialization of countries in different sectors. Trade within the same industry can be intense between similar economies, as seen in Europe. The similarity of economic structures in North Africa (excluding hydrocarbons and phosphates) is therefore not a barrier to trade integration in region.

The real challenge to the regional market potential of the countries of North Africa lies not in the similarity of their economies but in the relative weakness of their economic development, and/or their lack of industrialization.

Traditionally more open to FDI than countries in North Africa, ASEAN was also very early integrated into the strategies and planning of global companies, first as a production base, and then as a market. Foreign investors have contributed the most to trade integration in South East Asia. Direct investment from foreign companies has created structural interdependencies between different parts of different industries in the region.

The publication highlights the need for countries in North Africa to promote multilateral liberalization that promotes regional integration; to identify shared objectives; to stimulate inward FDI; and to promote the expansion of regional air transport.