Trade Liberalization and Export Diversification in Selected MENA Countries

Abstract

Export diversification has been an indispensable element in the discussion of the growth dynamics in developing countries since the 1950s, where the Prebisch-Singer thesis argued that concentration in the exports of primary products would lead to deteriorating terms of trade, income volatility and decreasing growth rates. Diversification of exports from fossil fuels and related products to other sectors has been a policy priority in the resource-rich MENA countries since the 1980s. This policy has been regarded as an integral part of wider economic policies in terms of liberalization of internal markets and external trade, and price and exchange rate reforms. This paper examines how trade liberalization affects export diversification in selected MENA countries by using a panel data analysis.