Nessun titolo diapositiva

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THE SOCIO-ECONOMIC IMPACT OF THE
EURO-MEDITERRANEAN FREE TRADE AREA ON MPs A
GLOBAL VIEW  
IPALMO-GDN Research Proposal Umberto
Triulzi Scientific Director, IPALMO 7th ANNUAL
GDN CONFERENCE Parallel Session MIDDLE EAST AND
SUB-SAHARAN AFRICA INSTITUTIONAL CRISES AND
SOLUTIONS St. Petersburg, Russia January 20th
2005
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Structure of the Presentation

• The Euro-Mediterranean Partnership and the
  Free-Trade Area key elements
• What we know
• Socio-economic vulnerability and trade
  liberalization on MPs a macro approach
• The new GDN-IPALMO Research Projet 2006-2007
• Expected results

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The Euro-Mediterranean Partnership

• 1995 Barcelona Conference starting point of the
  Euro-Mediterranean Partnership,
• The Euro-Mediterranean Partnership currently
  comprises 25 EU Member States and 10
  Mediterranean Partners (Algeria, Egypt, Israel,
  Jordan, Lebanon, Morocco, Palestinian Authority,
  Syria, Tunisia and Turkey). Libya has been
  observer since 1999.
• Main objectives of the Partnership
• 1. Definition of a common area of peace and
  stability
• 2. Construction of a zone of shared prosperity
• 3. Rapprochement between people

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The Euro-Mediterranean Free-Trade Area key
elements

• Target date 2010
• The Euro-MED FTA will foresee bilateral
  (North-South) trade liberalization as well as
  Free Trade Agreements among MPs (South-South
  integration).
• This FTA foresees free trade in manufactured
  goods and progressive liberalization of trade in
  agricultural products.
• The EEAMPs will include 40 States and about 700
  million consumers, i.e. one of the worlds most
  important trade entities.

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The EU-MED FTA an ambitious goal for all partners

• From the MPs point of view
• The implementation of the Eu-Med (FTA) is above
  all a tool to support MPs in dealing with
  critical challenges such as
• favoring employment amongst an active population
  growing fast
• shifting from public to private-sector driven
  economy
• building a new development model able to get a
  more dynamic international role
• Reach a more stable and diversified
  specialization model

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The EU-MED FTA an ambitious goal for all
partners (2)

• From the EU point of view
• EU aims mainly at
• favoring regional integration
• promote a more equilibrate production factors
  movement within the Mediterranean Area
• strengthening the implementation of the European
  Neighborhood Policy (ENP)

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The EU-MED FTA some stylized facts on MPs
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The EU-MED FTA some stylized facts on MPs
1992-2003
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The EU-MED FTA some stylized facts on MPs
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The EU-MED FTA some stylized facts on MPs
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The EU-MED FTA some stylized facts on MPs
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What we know..

• Several impact studies on the Euro-MED FTA have
  been carried out by applying partial or general
  equilibrium as well as cross-country exercises
  mainly based on gravity models
• The main results highlight weak gains from trade
  and considerably lower if compared to unilateral
  and multilateral liberalization options (Stern,
  2001)
• Moreover, they usually do not consider the role
  of trade-related uncertainty and the induced
  vulnerability on social-economic development
• This latter key issue has been the specific focus
  of a first study carried out by IPALMO, in
  collaboration with GDN and IDE_at_, on the area
  (under a macro approach)

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Stylized Facts Per capita consumption volatility
in MPs (1990-2003)
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Stylized Facts Per capita consumption and income
volatility in MPs
In addition some of the MPs show a higher
degree of volatility of consumption with respect
to income (Egypt and Tunisia) or a very low
ability to maintain stable path of consumption
(Turkey and Morocco)
Eu av. pc cons. vol 0,018
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Socio-economic vulnerability and trade
liberalization on MPs a Macro approach

• We built a Trade Vulnerability Index (TVI)
  following a two-stages procedure
• Firstly, we assessed the effects of volatility
  (considered as a proxy of uncertainty) on pc
  consumption growth by applying the IV method of
  estimation

• Secondly, we built the TVI as the expected value
  of the welfare loss due to the occurrence of
  covariate trade shocks

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An empirical exercise TVI
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What has happened?
Uncertainty has long term effects on
pc Consumption growth!
Consgrowth
Consgrowth
Consgrowth
Consgrowth
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What we have learned from The Impact of Rich
Country Policies on Poverty A Global View

• Under the GRPTrade, IPALMO has elaborated a
  first survey about the overall effects of trade
  liberalization on developing economies, with a
  specific focus on the effects of multilateral
  trade policy
• This survey highlights a set of critical points
  concerning the past and recent research works on
  the topic
• The aim of the new GDN-IPALMO research project
  focused on the Euro-MED FTA is starting from the
  above critical points to launch a new approach to
  the assessment of North-South FTAs

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The new GDN-IPALMO Research Projet 2006-2007

• More specifically, the new Research Program will
  address the issue by integrating two different
  dimensions a worldwide/regional dimension and
  more specific in-country dimension.
• It will be articulated into four integrated lines
  of research

2. Pro poor growth and social protection
1. Updating modeling instruments
3. Multilateral and North-South regional
integration
4. Regional integration and global value chains
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1. Updating modeling instruments

• The aim is to develop a new (modified)
  methodological framework, able to embody the role
  of uncertainty, highlighting its negative and
  pervasive role
• This kind of framework will be adopted both at
  global and regional level, in order to build a
  most integrated micro-macro approach (meso level)
• The results derived at global level will be
  applied to the regional model, whose outcomes
  will constitute a feedback for global analysis

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2. Pro poor growth and social protection

• This key issue is strongly linked to the first
  one
• It concerns the need of implementing balancing
  interventions, for coping with vulnerability,
  both for the society as a whole and even more for
  some specific groups
• To this aim, the project will take into account a
  double focus
• the specific pro poor effects of
  Euro-Mediterranean trade liberalization focusing
  on the main poverty-relevant transmission
  channels
• the suitable social protection policies for
  better preventing, coping and managing trade
  induced risks

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3. Multilateral integration and North-South
regional integration

• This line of research aims at assessing if the
  implementation of a North South FTA can help MPs
  countries in adopting a trade policy regime that
  fosters multilateral system
• The objectives of this research activity are
  threefold
• to investigate if DCs deeply involved in
  multilateral system have more economic benefits
  from trade policy
• to underline costs and benefits and changes that
  are required to make existing policies fully
  consistent with WTO rules
• to assess if the creation of the Euro MED FTA
  provides suitable institutional frameworks to
  foster the participation in the WTO system

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4. Regional Integration, local suppliers and
global value chains

• This is a key but neglected issue in the current
  debate. Its aim is also threefold
• to define a systematic measure of Value Chains
  governance, looking at the specific
  buyer-supplier relationship and at the strategic
  role played by the global buyers along the chain
• to study the relationship between different
  forms of VC s governance and local supplier
  performance
• to extend the span of variables to capture
  firms performance, by focusing on both
  productivity and measures of upgrading processes.

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The Research Proposal expected results
Get a better and comprehensive picture of the
effects of Euro-Med FTA by the introduction of
uncertainty. This will shed light on the
adjustment process and the socio-economic impacts
of the transition from an equilibrium to a new
one.
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Elaborate guidelines and policy indications for
supporting policy making in the creation of
complementary development and social protection
strategies
Shed light on the interactions between
North-South regional and multilateral
participation applied to the case of MPs
countries. This study will permit to link the
open regionalism issue with the development
dimension, drawing useful policy indications at
the global level.
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Find out practical ways of how Global Value
Chains analysis can inform policy throughout a
better understanding about the way in which poor
producers in MPs connect with producers and
consumers in the global economy, with the goal
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Thanks! Umberto Triulzi triulzi_at_ipalmo.com