This paper characterizes the tradeperformance of the Middle East and North Africa (MENA) overthe past 15 years. Cross-section results show thatMENA's exports to the outside world were only one thirdof their potential in recent years, after controlling forthe standard determinants of trade. Results from panel datashow that MENA's exports have been expanding morerapidly than exports from the rest of the world, offeringsome evidence of convergence. Still, at historical growthrates, it would take 20 years for MENA countries to reachpotential trade. When we exclude natural resources, exportsare also only one third of the benchmark, but the improvedexport performance over time is much slower and implies itcould take twice as long to reach potential. Interestingly,while MENA also under-trades within the region, the extentof under-trading is less acute than with the outside world.There is, however, no indication of more rapid regionalintegration over time, suggesting that recent tradeagreements among MENA countries have not stimulated regionaltrade to a greater extent than external trade. Finally, thereport examines intra-industry trade, which hascharacterized world trade growth over the period. East Asiaand Europe show large and rising intra-industry trade, bothglobally and regionally, reflecting increased trade indifferentiated goods and the expansion of supply chains.Despite neighboring these regions, the MENA countries havebeen largely left out of this transformation.
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