Integration in global value chains (GVCs) has been promoted as a key route to achieve diversification and sustainable economic and social development in non-oil countries in the Middle East and North Africa (MENA) region. Over the last two decades, countries such as Morocco, Jordan, Tunisia, and Egypt have focused on integrating their economies in such globalised networks of production and trade. As a result, exports in products such as textile and garments, agro-food, electronics, automotive, amongst others have increased substantially from a number of countries in the region. The developmental impacts of this have, however, been relatively limited. MENA countries largely failed to upgrade their economic and technological position in GVCs and remain specialised in low value-added activities in these chains leading to little overall developments in terms of type of employment and income levels. Most of their exports are also highly concentrated in a small number of export markets. This fragile position of the MENA region in GVCs is likely to be reflected in the way the region is affected by three ongoing shifts in the global economy.
First, the impacts of the global economic crisis in terms of demand growth shifts and production location shifts are still re-shaping the global map of production and trade. These impacts are particularly profound in a number of European countries that are key trading partners for the MENA region.
Second, important shifts in the map of global production are taking place, particularly the beginning of the relocation of low-cost manufacturing activities from China. This is likely to intensify in the coming decades with important implications for developing regions including MENA.
Third, a regulatory shift in the global economy is taking place with the leading advanced economies, the United States and the EU, moving into “deep integration” regulatory harmonisation agreements such as the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the EU “deep and comprehensive trade agreements” (DCFTA) agenda.
In this context, this project aims to examine the integration of non-oil MENA countries in global value chains and to explain the limited economic and social upgrading in GVC-integrated industries focusing on three key developmental dimensions: economic upgrading, job creation and working conditions, and environmental upgrading/downgrading. This will be done by examining the cases of Egypt and Morocco.
The key research question we aim to address is:
What explains the limited economic and social upgrading in GVC-integrated industries in Egypt and Morocco and what are the impacts of ongoing global shifts on the position of the two countries in GVCs and on GVC integration with the advanced economies as the key developmental route for the two countries and the rest of the MENA region?
To answer this questions, the research will focus on three main sectors: automobile, business services offshoring and readymade garments.
Shamel Azmeh | Principal Investigator
Shamel is Lecturer at the University of Bath and Visiting Fellow at the LSE Middle East Centre.
Abeer Elshennawy | Co-Principal Investigator
Abeer is Assistant Professor in the Department of Economics at the American University in Cairo.
image credit: Jared Kelly, flickr.com, 2007.