The Past and the Future Trade Patterns of the MENA Region: The Pursuit of Growth

This study investigates the past trade patterns of the MENA region and analyzes their impact. We employ a sample of two agriculture, one mining, ten manufacturing, and twelve service sectors of 21 MENA countries and 186 trading partners from 1990 to 2018. Our graphical illustration indicates that while the shares of the EU (the major trading partner with a share of nearly 40%) and other developed countries in all types of trade decrease, the shares of the MENA region, China, and other developing countries in all kinds of trade increase. Our growth results propose a strong heterogeneity for the MENA region in terms of trade flows and trade partners. Our findings suggest that while expanding forward global value chain participation with the United States, other developed, and other developing countries promotes the manufacturing sector, expanding backward global value chain participation with the EU countries enhances the service sector. An increase in backward GVC participation with the non-MENA countries and final exports to China benefits the agriculture and mining sectors. Given these results, we argue that global value chain participation of the MENA region promotes the growth of all sectors depending on the types of flows and trading partners. These results reveal the importance of systematic and dynamic trade policies to effectively integrate the MENA region into both regional and global value chains and to reap their benefits.