Shallow vs. Deep Integration in the Southern Mediterranean: Scenarios for the region up to 2030. MEDPRO Technical Report No. 13/March 2012

This research develops a quantitative analysis aimed at simulating the trade effects of various integration scenarios between the EU and its Mediterranean Partners (MPs). Results for shallow integration show that the completion of tariff removal is expected to produce limited gains, except in Algeria. However, further steps toward deep integration would lead to much more significant gains. In this regard, the elimination of non-tariff barriers is expected to increase EU exports to MPs up to 60%. In addition, MPs’ imports and exports to the EU could also considerably increase due to an improvement of logistics performance in these countries.

Les enjeux de la libéralisation des comptes de capital dans les pays du sud de la Méditerranée. = Challenges arising from Capital Account Liberalisation in the Countries of the South Mediterranean Region. MEDPRO Technical Report No. 11/March 2012

This MEDPRO Technical Report confirms the importance of commercial openness and macroeconomic performance (i.e. the control of inflation and stability of current account balance and exchange rate) on growth dynamics in the south Mediterranean countries. In particular, the positive impact of capital account liberalisation is conditioned by the imperative reinforcement of institutional quality, country risk reduction, and government stability. An examination of the Tunisian case shows that only sectors subject to tariff dismantlement within the framework of the Association Agreement with the EU appear to benefit from capital account liberalisation. Furthermore, the report shows that a scenario of capital account liberalisation requires the anticipation of monetary policy reaction functions. It follows that the mechanisms for interest rate adjustment, or inter alia, the interest rates’ reaction to price fluctuations, are weakly volatile. In turn, the analysis shows that an active control of inflation mismatches occurs essentially through exchange rate corrections, thus highlighting the greater interest central banks have in exchange rate stability over real stability. A capital account liberalisation scenario would hence impose a tightening of monetary policy.

Determinants of Growth and Inflation in Southern Mediterranean Countries. MEDPRO Technical Report No. 10/March 2012

Despite significant economic reforms in many Southern Mediterranean EU neighbour countries, their growth performance has on average been subdued. This study analyses the differences in growth performance and macroeconomic stability across Mediterranean countries, to draw lessons for the future. The main findings are that Southern Mediterranean countries should benefit from closer ties with the EU that result in higher levels of trade and FDI inflows, once the turbulence of the ‘Arab Spring’ is resolved, and from the development of financial markets and infrastructure. They will also benefit in keeping inflation under control, which will depend in great part on their ability to maintain fiscal discipline and sustainable current accounts. One of the main challenges for the region will be to implement structural reforms that can help them absorb a large pool of unemployed without creating upward risks to inflation.

Israel and Palestine and state (un)sustainability. MEDPRO Technical Report No. 5/June 2011

This report explores the concept of state (un)sustainability in Israel and Palestine. The starting point sees conflict resolution as an independent variable for any change and progress in the area, in terms of a political, just and credible agreement between the two parties, which will then play a decisive role in the development of the Mediterranean region. These developments and prospects for a solution are then evaluated on the basis of state (un)sustainability, a broad notion that refers to the possibilities for long-term development at the political, social and economic levels. The very nature of Israel’s democracy and its relations with its Arab minority, the challenges related to the establishment of a viable and sustainable Palestinian state, and the regional dimension of all the actors involved are considered in order to evaluate future scenarios in this context. Three scenarios are tested: sustainability, which corresponds to the end of the conflict and the establishment of two viable and independent states with a tangible improvement in political and economic indicators; unsustainability, which refers to the perpetuation of the political status quo and the progressive deterioration of all political, economic and social indicators; and finally, weak stability, which entails the achievement of a sterile political stability, able to sustain the present status quo but unable to confront the main challenges for the future of the country(ies).

Knowledge-Bearing Elites and Industrial Performance in France and Germany. CES Germany & Europe Working Papers, No. 04.5, December 1993

Most comparative studies of public policies for competitiveness focus on the links among public agencies and industrial sectors. This paper argues that the professions---or knowledge-bearing elites-that animate these organizational links are equally significant. For public policies to promote technological advance, the visions and self-images of knowledge-bearing elites are par­ ticularly important. By examining administrative and technical elites in France and Germany in the 1980s, the paper identifies characteristics that enable these elites to implement policy in some cases, but not in others. France's "state-created" elites were well-positioned to initiate and implement large technology projects, such as digitizing the telecommunications network. Germany's state-recognized elites were, by contrast, better positioned to facilitate framework­ oriented programs that aimed at the diffusion of new technologies throughout industry. The linkages among administrative and technical elites also explain why French policymakers had difficulty adapting policy to changing circumstances over time while German policymakers managed in many cases to learn more from previous policy experiences and to adapt subsequent initiatives accordingly.