Though the Middle East and North Africa(MENA) region has weathered the recent global financial andeconomic crisis relatively well, it still faces dauntingmedium-term challenges. These include high unemployment(especially among young people), vulnerability to oil andfood price shocks and water scarcity and inefficiencies ofpublic sectors. Integration of the region into the globaleconomy has been slow. Of particular concern is thestagnation in the region's share of global non-oilexports, an indication of missed opportunities fordiversification and growth. Integration within the region,while rising, is also on the low side when compared withother middle- and high-income regional blocs. To start offthe removal of intraregional tariffs under the Pan-Arab FreeTrade Area (PAFTA) and the adoption of low common tariffs bythe Gulf Cooperation Council (GCC) which coupled withimprovements in infrastructure, especially roads andtelecommunications is generating benefits. But much remainsto be done, especially in reducing nontariff barriers totrade, harmonizing policies and procedures, and facilitatingcross-border trade through development of infrastructurelinks and trade facilitation. Fortunately, trade in serviceshas recently emerged on the agenda of national and regionalauthorities; this is an area of substantial potentialwelfare gain for the region.
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