Strengthening MENA's Trade and Investment Links with China and India
September 2008 - China and India’s spectacular economic rise over the last two decades has accelerated their trade with Africa, Latin America, and the Middle East and North Africa (MENA). Their demands for oil, gas, and other natural resources have been driving new relationships with MENA countries based not only on energy but on trade, investment, and political ties. Indeed, Dubai has become the new Silk Road—the intersection where people, capital, and ideas meet—and Beijing, Shanghai, Hong Kong, Mumbai, Riyadh, and Cairo are the new centers.
The future may well bring new opportunities and faster growth to MENA countries, but the challenges are great. For MENA oil-producing countries, faster growth in China and India will increase revenues from oil and the difficult choices associated with their management. For the laborabundant, nonoil-producing countries, competition with China and India will spotlight the need for policy measures to increase productivity. This may require the broader institutional changes seen in China and India—and may thus take some time. But the horizon for creating much needed employment is shorter, suggesting the importance of a pragmatic reform agenda that can accelerate productivity, trade, and investment in the region.