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With the implementation of the European Neighborhood Policy, many Arab countries have been actively pursuing economic and policy reforms in the context of bilateral Action Plans with the European Union (EU). Among other things, these reforms target enhanced communication infrastructures as well as more efficient public administrations. Using a gravity model and panel data econometrics, we evaluate the impact of the Internet diffusion and institutional efficiency on EU-Arab trade. We generate a series of simulations suggesting that upgrading the aforementioned factors would significantly increase Arab imports from the EU. Results allow us to identify sectoral-reform priorities from both country-level and regional perspectives to be anchored in the Action Plans.

Communication Infrastructures, Institutional Efficiency and EU-Arab Trade: Assessment and Implications