Economic Integration in MENA: The Global, Regional, and Subregional Integration Indices and Their Dynamic Interactions

I. IntroductionIt is commonly said that the Middle East and North Africa (MENA) is economically the least integrated region in the world 1) , but the actual pattern is more complex when we distinguish economic integration at three different (global, regional, and subregional) levels.The three subregions in MENA are usually classified by their geographical proximity (El-Erian and Fischer, 2000;Akhtar and Rouis, 2010).They are Maghreb on the west (Algeria, Libya, Mauritania, Morocco, and Tunisia), Mashreq on the east (Egypt, Iraq, Jordan, Lebanon, Palestine, Sudan, and Syria), and Gulf (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, and Yemen) in the Arabian Peninsula; see also Figure 1.On a global level, this region is strongly integrated with the outside world.On a subregional level, countries are closely cooperating with their neighboring countries.The weakest link is their integration at the regional level.We refer to this pattern as a 'dumbbell integration', indicating close integration in the two tails (the world and neighboring countries) and loose integration in the middle (among the subregions).