The economies of the Arab region are enormously profitable, but also unstable. In a region where economic integration has been disrupted by conflict and crises, trade is a powerful engine that can help bring people out of poverty. Many countries still rely too heavily on revenue from oil and gas. In order to overcome these challenges, the Arab region requires an innovative and competitive model of economic integration that capitalizes on technological advancement, a qualified workforce and women and youth’s potential in the labour market.

But what does that mean and how does it work? 

When it comes to trade, national markets work better when they work together – market size matters after all. The African Development Bank Group (2012) estimated that the lack of integration among economies of North Africa costs between 2 and 3 percent of their GDP. Therefore, strengthening regional cooperation with neighboring countries in this area of the world is of primary importance as it can leverage on the advantages of different Arab economies. In addition, besides bolstering economic growth, investing in trade and the digitalization of its procedures will contribute to enhance transparency and most importantly to reduce inequality and promote peace and stability in the region.

As Arab region policy makers are setting their priorities for the 17 Sustainable Development Goals (SDGs), attention also needs to be given to concrete steps forward. For instance, the 2030 Agenda adopted by UN member states in 2015, sets a target to double the Least Developed Countries' (LCDs) share in global exports by 2020.

So how much is being done in the region towards strengthened economic integration?

One of the milestones initially envisioned by Arab Leaders in recent years was to fully operate the Pan Arab Free Trade Area (PAFTA) and upgrade it in function of new global developments. That would enable the transition from the Free Trade Area towards the Arab Customs Union (ACU) and Common Market. In response to economic diversification programmes that have taken place in many PAFTA countries, and requirements of boosting competitiveness, the Economic and Social Council of the Arab League (ECOSOC) in September 2018 adopted the resolution to upgrade the PAFTA, aiming to modernize Arab trade policies and mainstream regional cooperation. However, progress have been very slow due to the difficulty in translating policies into tangible results that promote job creation, increase local production, encourage small and medium enterprises (SMEs) and the development of trade and transport corridors.

In these circumstances, accelerating Arab economic integration is pivotal as it will mitigate the impacts of economic uncertainty and promote inclusive growth in the region.

Strengthening Arab Economic Integration for Sustainable Development (AEISD)

Tapping into the remarkable potential of trade in the Arab region and guided by the 2030 Agenda, in 2017 UNDP launched the AEISD project to accelerate the effects of trade reforms for job creation, increased stability and inclusiveness, with active engagement of women and youth as main resources to achieve these goals.

The project is based on three interconnected areas of work. First, it provides technical assistance to the League of Arab States (LAS) and member states of PAFTA in working towards a deepened integration, with the main objective of making trade an engine for inclusive and sustainable growth in the region. The project activities focus on the modernization of trade policies and facilitate policy dialogue and cooperation among Governments and between them and the private sector.

The second component of the project revolves around strengthening connectivity among regional economies, driven by necessity the private sector. The project activities aim at facilitating and speeding up border-crossings and customs procedures in order to save time and increase revenue.

The third component looks into ways to enhance women’s role in trade policy-making to further regional cooperation and economic integration. Through studies and regional workshops, the project aims at tackling the subject of women’s access to information, production factors, financial resources as well as business and job opportunities.

So, what does UNDP do and why does it matter?

One of the challenges the region is facing nowadays is being competitive to attract investments into production facilities and infrastructure in the Arab countries. With this aim, the project promotes policy reforms and modernization of border management practices and custom procedures through the establishment of the National Single Window system (NSW), which leverages data exchange methodologies and other innovative technologies to increase and speed up trade flows. By nature, the NSW involves a transformation process in cross border operations’ management modalities and promotion of partnership among key players within the supply and value chains, through synchronized and digitalized processing of documents.

A majority of countries embarked on the NSW as part of their efforts to improve delivery of public services, because the simplification of administrative process leads to more transparency and efficiency for governmental agencies and the public, manufacturers, traders, investors and logistics operators. Empirical evidence provided by the World Bank points to the fact that economies with operational Single Windows consume less time in the preparation of dossier of documents related to clearance and release of imports and exports.

In line with the above, at the national level, Jordan made important advances to increase its trade efficiency by modernizing and digitalizing customs procedures through the NSW. Six governmental agencies were trained by AEISD experts and founders of the Indonesian National Single Window to collaborate towards the establishment of Jordanian NSW, launched in January 2018.  On the same model, the project is supporting Egypt to set up a NSW and build relevant capacity to put the digital platform to the service of the public, including businesses and industries.

UNDP’s AEISD project takes a comprehensive approach, working with countries to build inclusive and strong societies for lasting change. Through a coordinated intervention that revolves around designing and developing trade policies, building local expertise and conducting consultations with key stakeholders, the AEISD supports Arab countries in adopting new policy platforms to strengthening regional economic integration and incentivize the creation of business opportunities and jobs for Arab citizens.

“We want to build inclusive and strong societies for a more resilient Arab region with better livelihood opportunities for its citizens. How do we do so? Promoting trade is an effective tool. UNDP’s AEISD project charts a course for success in the Arab States by providing an effective mechanism for a diversified and competitive economy”, says Quang Anh Le, AEISD Chief Technical Advisor.