Regional Industrial integration: the case op the Arab Middie East

The general theme of this thesis is that economic integration in the case of developing countries ought to be conceived as a strategy for economic development, rather than as a tariff issue. Considering that developing countries are still in the process of realising their economic potential, they can benefit from the dynamic effects of integration. It is argued that economic integration among such countries is marked with uncertainty. Its success hinges to a large extent on the ability of the integrating countries to adopt an "allocative" approach which simultaneously avoids the occurrence of crises in the distribution of benefits and costs of integration and ensures the coordination of investment and production programmes to take advantage of the enlarged market. The "allocative" approach aims initially at partial integration, as it concentrates on the sector or industry where integration can be most effective. After some gains are realised, integration could be extended gradually to include other sectors. This framework is discussed in the context of the Arab Middle East countries, and an approach and a strategy for industrial integration among these countries are suggested. The study comprises two parts. In Part I, an attempt is made to develop a theoretical framework for the study of economic integration among developing countries. It starts by examining in Chapter One the theory of economic integration and its relevance to developing countries, and then in Chapter Two develops an operational methodology for identifying and measuring integration effects of regional projects. Chapter Three reviews the alternative approaches to regional industrial integration experienced by various groupings in Latin America, Africa, and Asia, with a view to appraise the "package deal" approach as an innovative solution to the problem of distribution of benefits and costs, and its desirability for a regional grouping such as the Arab Middle East countries«In Part II, the case for integration among the Arab Middle East countries (to include the Arab countries in Asia together with Egypt and the Sudan) is examined, with an attempt to devise a strategy for an integrated industrial development among these countries* As a starting point, Chapter Pour gives a critical account of the attempts at regional economic cooperation and integration in the Arab Middle East region, and the emerging role of capital surpluses accruing to the oil countries in promoting the idea of integration. Chapter Five discusses the economic framework of the countries under consideration, in order to assess the role of economic integration as a desirable alternative to national development. Chapter Six discusses the developing industrial growth patterns in the above countries, and relates integration to future industrial growth. Chapter Seven explores some of the possibilities for integration among the Arab Middle East countries in specific industries in a number of industrial sectors whose economic viability can be enhanced by the pooling of scarce resources, skills, and markets. This will be followed in Chapter Eight by a methodological study for the assessment of the integration potential in one of these industries which is fertilizers. Chapter Nine focuses on the elements which are deemed central in the framing of a strategy for an integrated industrial development based on the "package deal" approach in the region. Finally, Chapter Ten presents a concluding summary of the study