This book is organised as follows: the first chapter examines the pattern of structural transformation in Middle East and North Africa, or MENA and summarises the role of various factors examined thoroughly in the rest of the volume. The second chapter examines the correlates of this overall disappointing performance. At the macro level, MENA countries have been unable to maintain depreciated (undervalued) real exchange rates for long periods, yet such undervaluation has proved important to offset the market failures and poor institutional environment that severely hit the dynamic non-resource-intensive traded sectors.
The third chapter shows that services sectors in resource-rich MENA countries have been declining as a share of gross domestic product (GDP) and of non-mining GDP as per capita incomes increase. The fourth chapter explores the presence of systematic differences between the patterns of diversification in MENA and the rest of the world. The fifth chapter shows that from a historical perspective, fiscal policy has not contributed significantly to diversification in MENA, because it has been more oriented toward food and fuel subsidies (consumption) rather than toward public goods such as infrastructure (investment). Finally, in the sixth chapter, the authors emphasise the different characteristics of the regional partners in terms of their resource endowments and consider wealth distribution effects within the region.