Economic convergence in the Arab region: Where do we stand and how do we further it? (by Jose A. Pedrosa Garcia and Zara Ali)

A new ESCWA paper explores convergence in Arab countries in regard to several economic dimensions. Overall there is little evidence of convergence in income per capita for the entire Arab region, although this result is not robust to different timeframes. The existence of natural resources by itself does not explain convergence, as resource-poor countries are not converging among themselves. The same applies to resource-rich countries. Disaggregating by sub-regions and regional integration agreements (RIA), it becomes clear that i) disparities in income per capita within the three Arab sub-regions have decreased in the last two decades, and ii) GCC countries have strongly converged since the GCC was created (non-GCC countries have not). As countries cannot change location, RIAs are proposed as the way to foster convergence. For RIAs to be successful, however, key imbalances have to be solved (notably in public finances), and Arab leaders will have to show stronger political coordination.