The Growth of China and India: Implications for the Countries in the Middle East and North Africa

Elena Ianchovichina, Maros Ivanic and Will Martin

No 331759, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The growth of China and India affects the economies in the Middle East and North Africa (MENA) through increases in opportunities for MENA to trade with China and India, increases in third-market export competition, and increases in third-market imports by China and India. The impact of faster growth in China and India on the MENA region is positive for welfare with the overwhelming majority of gains accrued through improvements in MENA region’s terms-oftrade associated with increases in world prices of energy products and of some agricultural products. These gains are larger when the likely improvements in the quality and variety of exports from China and India are factored in. Increased competition in third markets reduces the opportunities for MENA countries to expand exports of manufactures, and suggests that exports of manufactures might decline in some cases. The expansion of the energy sector and the contraction of manufacturing and services is a sign of a Dutch disease effect. All MENA countries will face increasing pressures to adjust their domestic and trade policies in order to improve competitiveness and cushion the effects on their non-energy sectors.

Keywords: International Relations/Trade; International Development (search for similar items in EconPapers)
Pages: 37
Date: 2008
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