This paper examines recent developments and future prospects of intra-regional trade in industrial products in the region covered by the Economic and Social Commission for Western Asia (ESCWA). It analyzes the underlying dynamic shifts in the intra-regional export structure as well as the extent to which changes in the structure of industrial exports are caused by the changes in comparative advantage or changes in trade policies. Prospects of intra-regional exports in industrial products are highlighted against the background of the ongoing unilateral trade liberalization in Arab countries, the global trade liberalization in the wake of the Uruguay Round and the European Initiative to create a free trade zone with neighboring ESCWA countries around the Mediterranean. Given these developments, further regional cooperation in intra-regional trade such as the creation of an Arab free trade area would provide a solid basis for regional integration in terms of markets for industrial production. Such a regional grouping would stimulate domestic as well as foreign investment and would also strengthen the bargaining position of individual Arab countries seeking integration based on reciprocal trade liberalization with the outside world.
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