Revolutions in Arabic world as an example of unintentional trade barrier

A man sells bread near the Interior Ministry in Cairo February 7, 2012. (photo by REUTERS/Mohammed Salem)

With all the political and social change that is happening in the Arab world (War, Revolutions, Ben Ghazi affair...etc.), it is highly probable that the trading relationships between Arab countries and the rest of the world will get disrupted for many years. Thus, how can such events have an effect on the trading relationships of Arab countries?

At first glance, the Arabic countries are split to countries located in North Africa (Tunisia, Libya, and Egypt are the countries in concern with the new events), and countries located in Middle East (Iraq, Syria and Jordan are the countries in concern in this case). Why is it important to make the difference between the countries in the two zones? Because the geographic location not only represents cultural differences between the Arab countries, but also economic dissimilarities, mainly in the economic base, trading partners, and dependency on trading. On the one hand, the economy of the Arab countries located in North Africa is based on services and agriculture, and the main partner of the Maghreb is European Union. On the other hand, the economy of the Arab countries of Middle-East is based on oil and services, and the main partners of these countries are Asian countries and the U.S.A.

In this way, distinct events in several Arab countries can have different economic effects in these entities.

So, in order to be more precise, I chose the case of the January 25 Revolution in Egypt and its important economic implications.

On the one side, the revolution caused a deterioration of Egyptian economic indicators. In fact, whereas the economic growth rate in 2010 was at 5.7%, it dropped to 1.8% in 2011. Moreover, the massive public debt, that represents 84.3% of the GDP has been continually increasing. In addition, according to a French bank, the daily economic losses during demonstrations was of 300 million dollars. 

On the other side, the events that took place in 2011 affected most economic sectors, especially tourism (10% of Egypt's GDP), exports and remittances from abroad. In fact, the overall estimated losses in Manufacturing, construction and tourism sectors was of 1.62 Billion dollars. Furthermore, the local currency came under unforeseen pressure because of the monetary transfers to foreign countries and the flight of certain foreign and Arab investments, which negatively affected Egypt's balance of payments.

In conclusion, the January 25 Revolution had a great negative effect on the economy of Egypt, which caused the escape of foreign and Arab investment, and the decrease in tourist visits. Thus, as the example of the Egyptian revolution attested, revolutions are serious unintentional trading barriers facing the Arab countries.

Sources in English:

http://www.al-monitor.com/pulse/business/2012/03/future-plan-of-Egyptian-economy.html

http://english.ahram.org.eg/NewsContent/3/12/55177/Business/Economy/IMF-revises-upward-Egypt-growth-for-.aspx

Sources in Arabic:

http://aljadidah.com/2011/02/آثار-الثورة-على-الإقتصاد-المصري

http://shorouknews.com/columns/view.aspx?cdate=03022012&id=cc3d1bbb-e904-462d-abde-f7ce268e7d83