This paper investigates the evolution and determinants of manufactured exports and foreign direct investment (FDI) in 11 southern Mediterranean countries over the period 1985–2009 as well as their prospects under different scenarios pertaining to the development of the determinants. The econometric analysis confirms the role of exchange rate depreciation, the openness of the economy and the quality of institutions and infrastructure in fostering manufactured exports and FDI inflows in the region. The assessment of the prospects suggests that a scenario of deeper integration with the EU entails superior performance for manufactured exports and FDI compared with either the status quo or less integration with the EU but greater integration within the region.
Khalid Sekkat is Professor of Economics at the University of Brussels and Research Fellow at FEMISE in Marseille.
MEDPRO, short for Mediterranean Prospects, is a project involving a consortium of 17 highly reputed institutions from throughout the Mediterranean region, funded under the EU’s 7th Framework Programme and coordinated by the Centre for European Policy Studies (CEPS), based in Brussels. By considering a wide range of interactions, MEDPRO aims to explore a number of alternative scenarios that can be expected to arise by 2030 in the region with a view to laying a sound foundation for future policy on social and economic development, paying special attention, where relevant, to the role and potential contribution of the EU.