The Tax Structure and Trade Liberalization of the Middle East and North Africa Region

There has been an unprecedented trade liberalization which started in the mid- 1980s in a wide spectrum of developing countries. In the same period, there have also been considerable changes in the tax structures of countries. This paper uses panel data on 65 countries, including 16 Middle East and North Africa (MENA) countries, for the period 1980–1997 to examine how tax structures responded to trade liberalization. It is found that, unlike other non-OECD countries, the MENA countries did not increase their reliance on domestic consumption taxes in response to trade liberalization. Trade liberalization did not seem to have a strong impact on major revenue sources of the MENA countries.