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BECO 1630A - Openness, Growth and Crisis in the South Mediterranean Countries

Type d'enseignement : Seminar

Semester : Spring 2017-2018

Number of hours : 24

Language of tuition : English

Pre-requisite

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Course Description

This course provides a general introduction to economic and social development issues in the Mediterranean Partner Countries (MPCs). The revolutions in the Arab world surprised those who thought that opening-up to trade and developing international co-operation had finally placed the MPCs on a trajectory of economic convergence with their major EU neighbours. Yet, there was often a lack of inclusiveness, the reduction in inequalities was insufficient and youth unemployment always remained a major issue. In that respect, the course has three main objectives: the first aim is to familiarize students with basic concepts related to economics. Students will also be acquainted to researching data to be used for group papers. The second aim is to understand the economic development model, important efforts undertaken and how despite them MPCs entered a period of instability. The third is to discuss on what is next. What are the pre-requisites for sustainable growth in MPCs and how can long-term structural issues be resolved? What is the potential for innovation and creativity as a crisis-exit strategy? How can the new economic model of MPCs be one of “inclusive growth”?

Teachers

TSAKAS, Constantin (Maitre de Conférence)

Pedagogical format

Part One: The path towards openness in the MPCs. In the first sessions we start by looking into the following: How did international trade evolve in the latest decade? What are the concepts of trade openness and effective protection? Looking at the macroeconomic situation of MPCs during the 70s and 80s allows contextualizing the choice of the economic development model that had to be made. What are the EuroMed agreements and what was the expected impact on the economic development of MPCs? Sessions: 1. Context: The evolution of international trade and the economic situation of MPCs. 2. Openness, trade protection and the EuroMed agreements: Understanding the implications. Part Two: Impact of the EU-Med agreements : integration, growth and macroeconomic development in MPC's The next series of sessions is dedicated to the impact of the integration route followed by MPCs. After signing the EU-Med agreements, we first look at the trade impact on MPC's economies. Did trade evolve as expected and did all parties win? Additionally we focus on the “quality” component of trade integration and seek to answer whether MPC's specialized in higher value-added activities or remained focused in low-tech sectors. Then we tackle the delicate issue of the impact of trade openness on economic growth in MPCs. To do so, a review of the existing literature allows understanding different views regarding the link between openness and growth. We then seek to verify to which degree theories were actually verified in MPCs. Did trade integration ultimately yield increased economic growth and macroeconomic stabilization? Did it allow MPCs to weather the effects of the 2008/09 international crisis? Sessions: 3. The evolution of EU-MPC's trade activity: Was it a win-win situation? 4. The trade openness-growth link: Understanding divergences in the literature. 5. Was growth and macroeconomic stabilization achieved in MPs? Part Three: The economic and social crisis after the “Arab Revolutions” and what lies ahead The revolutions in the South Mediterranean were bound to happen since social conditions did not improve as much. Economic growth does not suffice, a series of other factors must also come into play, some of which were neglected in MPCs. We look at some key issues that certain MPCs failed to successfully treat and the way in which they contributed to an unsustainable situation. More particularly, the MPCs seemed to lack inclusiveness. But what does this concept mean? How can MPCs implement a new model of inclusive growth? We will argue on how innovation can be part of this new vision proposed to the Mediterranean societies, especially for the youth. Whatever the short-term emergencies this objective must be implemented in current development strategies. What are MPCs hidden strengths in terms of human capital and how can they capitalize on them to enter a path of sustainable development? Sessions: 6. How we arrived to the “Arab Spring”. 7. The path to inclusiveness: Challenges related to employment and inequality need to be resolved. 8. Empowering human capital in MPCs: Innovation and creativity as a crisis exit strategy.

Course validation

- Group paper and presentation (40% of course mark); - Final Examination (50% of course mark); - In-class Participation (10% of course mark).

Required reading

  • Femise (2013), "Femise Report on Euromediterranean Partnership 2013", forthcoming
  • Ricardo A. Lopez (2005), "Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence", Journal of Economic Surveys, Vol. 19, No. 4, Blackwell Publishing Ltd.
  • Sarkar, Prabirjit (2007), "Trade Openness and Growth: Is There Any Link?", Munich Personal RePEc Archive
  • Tarlok Singh (2010), "Does International Trade Cause Economic Growth? A Survey", The World Economy.

Additional required reading

  • Roberto Chang, Linda Kaltani, Norman V. Loayza (2009), « Openness can be good for growth: The role of policy complementarities », Journal of Development Economics 90 (2009) 33–49.
  • Christian Saborowski; Mona E. Haddad; Jamus Jerome Lim (2010), “Trade Openness Reduces Growth Volatility When Countries Are Well Diversified”, WPS5222.
  • • Roberto Chang, Linda Kaltani, Norman V. Loayza (2009), « Openness can be good for growth: The role of policy complementarities », Journal of Development Economics 90 (2009) 33–49.
  • • Christian Saborowski; Mona E. Haddad; Jamus Jerome Lim (2010), “Trade Openness Reduces Growth Volatility When Countries Are Well Diversified”, WPS5222.
  • FEMISE (2009). « Femise Report on Euromediterranean Partnership 2008/2009 : Mediterranean Partner Countries Facing the Crisis », selected chapters, October.
  • FEMISE-European Investment Bank (EIB) (2010), « The crisis and ways out of it in the Mediterranean countries », selected chapters, November.
  • Romain Wacziarg and Karen Horn Welch (2008), «Trade Liberalization and Growth: New Evidence », THE WORLD BANK ECONOMIC REVIEW, VOL. 22, NO. 2, pp. 187–231.