1. Regional Integration Schemes in the Mediterranean
Sotiris Petropoulos
University of the Peloponnese

2. Contents Measuring Economic Development Regional integration
Agadir Agreement
Maghreb Union EU

3. Is economic growth even?

4. Why do we care about economic growth?
Economic Growth is connected to well being
Correlation between GDP per capita and life expectancy and literacy

5. GDP, Life Expectancy, and Literacy
Why do we care about economic growth?
GDP, Life Expectancy, and Literacy

6. Purchasing Power Parity
If exchange rates are used to compare the size if these countries to developed countries will make them seem smaller than the really are.
Should use PPP to compare size of economies across countries
Calculated by taking a basket of goods and finding how much it costs in different countries

7. Human Development Index
Initiated in 1990 and undertaken by UNDP in its annual series of HDRs.
HDI is based on 3 goals:
Longevity
Knowledge
Standard of living
HDI= 1/3(Income index)+1/3(Life expectancy index)+1/3(education index)

8. Human Development Index
Ranks 175 countries into 3 groups
Low human development =
Medium human development =
High human development =
Country
HDI
GDP rank-HDI rank
Low HD:
Tanzania
0.436
+21
Medium HD:
Turkey
0.735
-21
High HD:
Canada
0.936 +3

9. Continuous increase of trade volumes
International Trade
Continuous increase of trade volumes
Gradual decrease of tariff levels (rounds of trade negotiations)
Creation of WTO
Increase in the number and size of Regional Trade Agreements (RTAs)

10. Source: WTO, 2013

11. Source: WTO, 2013

12. Source: WTO, 2013

13. Definitions
Regional Integration: the integration of independent economic areas in larger economic entities (R. Gilpin)
International Area: Limited number of states geographically connected with a certain level of mutual interdependence (Joseph Nye)
Main characteristics:
√ geographical proximity
√ Increased level of exchanges

14. Theoretical Approaches
International Trade Theories: attempts to gain from free trade
Neo-institutionalism: created to deal with market imperfections and enhance economic cooperation
Basic motive: welfare
New Political Economy: emphasis on interest groups and in distributive consequences of regional integration.
Marxism: attempt by capitalists to increase the level of capital accumulation.

15. Realism and Neo-realism
Systemic Theories
Realism and Neo-realism
State interests
No-discrimination between politics and markets
Basic motive: power
Hegemonic Theory (Kenneth Waltz)
Responses to globalization

16. Functionalism (Mitrany)
Regional Level and Interdependence
Functionalism (Mitrany)
Political integration follows economic cooperation
Global leaders opt at creating international institutions
Neo-functionalism (Haas)
Self-empowered processes towards integration
Spill-over effect

17. Consolidation of domestic interests
Internal Politics
State power
Democratization
Consolidation of domestic interests

18. No general theory is enough Political motive are present Main drivers:
Eclectic Approach
No general theory is enough
Political motive are present
Main drivers:
Lack of international leadership
Emerging powers / intensification of international competition / technological advances
Economic security dilemmas
Increased importance of economies of scale

19. Levels of integration Characteristics FTA Customs Union Common Market
Economic Integration
No tariff barriers vis-à-vis members √
 (NAFTA)
Common external tariff
(EEC)
Free movement of production factors
(EU)
Harmonization of monetary and fiscal politics
Transnational decisions beyond economic issues

20. Issue of rules of origin
Trade consequences
Creation of trade
….among member-states
….trade diversion
…towards third parties
Issue of rules of origin

21. 1ο «wave» After WW II (EEC) 2ο «wave» Early 1990s
Importance
1ο «wave» After WW II (EEC)
2ο «wave» Early 1990s
Creation of new / further integration
of existing ones
Significant increase of importance

22. Most advanced example – the EU
Importance
Most advanced example – the EU
Global Phenomenon (ASEAN, NAFTA, SADC, MERCOSUR, SAARC etc)
Key: USA

24. NAFTA EU
ASEAN + 3
ASEAN
MERCOSUR
SADC

25. APEC

26. FTAA
NAFTA
EU-Mercosur EU
MERCOSUR

27. APEC
ASEM

29. Egypt, Jordan, Morocco and Tunisia Initially signed on 8 May 2001
Agadir Agreement
Egypt, Jordan, Morocco and Tunisia
Initially signed on 8 May 2001
Finally signed on 25 February, 2004
Entered into force: 6th of July 2006
Implementation: 27th of March 2007
Creates: 120 million market, combined GDP of € 200 billion.
Aim: Creation of an FTA
The initial agreement gives emphasis to:
Arab brotherhood
Charter of the Arab League, recognizing the importance of supporting joint Arab economic co-operation

30. Zero tariffs on most industrial & agricultural products
Agadir Agreement
A Free Trade Area gradually during a transitional period to be completed at the latest by 1 January 2005
Directly links the Association Agreements between Med. Countries and EU
Zero tariffs on most industrial & agricultural products
No deal in services
Issues of non-tariff trade barriers
Clause of “substantial damage” to local industries
Open to “Any Arab state member of the Arab League and the Greater Arab Free Trade area, linked to the EU through an Association Agreement or a free trade agreement”

31. Wippel 2005

32. Wippel 2005

33. Wippel 2005

34. Agadir Agreement website

35. Agadir Agreement website

36. Agadir Agreement website

37. Agadir Agreement website

38. Agadir Agreement
Why?
Benefits?

40. Algeria, Libya, Mauritania, Morocco and Tunisia
Maghreb Union
Algeria, Libya, Mauritania, Morocco and Tunisia
1st Maghreb Summit (1988)
Treaty of Maghreb Union (17 February 1989)
88 million people, +500 billion combined GDP
Aims:
The consolidation of fraternal relations
The progressive realization of the free movement of persons, services, goods and capital
The adoption of a common policy in all areas

41. 1991 - adopt unified tariffs on imports 1995 - full customs union
Maghreb Union
adopt unified tariffs on imports
full customs union
It is a step away from political tensions and towards economic gains
1st Maghreb Summit (1988)
Treaty of Maghreb Union (17 February 1989)
88 million people, +500 billion combined GDP
Aims:
The consolidation of fraternal relations
The progressive realization of the free movement of persons, services, goods and capital
The adoption of a common policy in all areas

43. Maghreb Union
Why?
Benefits?