Tag Archives: femise

Analyzing the impact of a EU-Tunisia DCFTA (report FEM43-16)

From a policy perspective, what do we conclude from these results: The opening
up of markets leads to opportunities and to the possibility of net welfare gains.This
result is well established from international trade theory and from a wide range of
empirical evidence. There are many sources of these gains, but only some of which
are accounted for in a modelling framework such as the one we have used. The
extent of the gains will depend critically both on the level of non-tariff barriers
between the EU and Tunisia and on the extent of any reductions in both tariff and
non-tariff barriers. It is therefore extremely important that more work is
undertaken to better understand the extent of these barriers and what specific
policies are needed to ensure their removal.

Financial Inclusion and Stability in the MED Region: Evidence from Poverty and Inequality (report FEM44-01)

Despite a significant growth in profitability and efficiency, the Middle East (MED) well developed banking system seems to be unable to reach vast segments of the population, especially the underprivileged ones. To this end, the onus of policymakers in the region is to create effective opportunities for financial inclusion, and subsequently poverty and income inequality reduction. Whether they have succeeded in their endeavor is an empirical question we seek to address in this research project. Using Panel data, GMM and GLS econometric models, and a sample of six MED countries (Al GMM and GLS econometric models and a sample of six MED countries (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia) over the period 2002-2018, this paper assesses empirically the impact of financial inclusion on income inequality, poverty, and financial stability in the MED region. While the empirical literature on the region is relatively scarce, this paper adds to that literature by bridging a significant existing gap, especially in the aftermath of the recent financial and debt crises and the recent political, social, and military turmoil that have been unfolding in several MED countries.

Our empirical results have shown that financial inclusion decreases inequality but has no significant effect on poverty. Inflation and population increase both inequality and poverty. Other empirical results have shown that the secondary enrollment ratio, female labor force participation and the trade openness variables are found to significantly affect poverty. While the empirical evidence indicates that enhanced financial integration is a contributing factor to financial instability, an increase in financial inclusion and in population contributes positively to financial stability. This study has also shown that greater access to financial services is positively contributing to the resilience of the banking system deposit funding base. This is particularly important during times of financial crises. Enhanced resilience of bank funding supports overall financial stability of the banking sector and the entire financial system. The latest debt and financial crises have shown that financial liberalization and inclusion in MED may not always be conducive to poverty reduction and financial stability improvements.

Our empirical findings have important policy implications. MED policy makers face tradeoffs when deciding whether to focus on reforms to promote financial development (financial inclusion, innovation, financial access, etc…) or whether to focus on further improvements in financial stability. However, synergies between promoting financial development and inclusion and financial stability can also exist. The results of this study could help foster a better policy to reform the financial sector by demonstrating how broadening the use of banking can have a direct impact on income distribution.

The recent and uncoordinated liberalization attempts have rendered MED financial and banking sectors more vulnerable to the recent financial and debt crises. In particular, the fast attempts to liberalize and financially integrate the Egypt, Jordan, and Morocco’s financial markets with the more mature markets of the United States and Europe has had devastating consequences on their banking sectors and stock markets.

When deciding on whether to focus on reforms to promote financial development (financial inclusion, innovation, access to financial services, etc.) and reduce poverty and income inequality, or on whether to focus on further improvements in financial stability, MED policy makers will have to bear in mind, the tradeoff that exits between financial liberalization and integration and financial stability. Carefully designed financial liberalization policies need to be timely introduced in order not to destabilize the financial system. Moreover, the latest debt and financial crises have shown that financial liberalization and development may not always be conducive to poverty and inequality reduction on the one hand, and to stimulate growth and development, on the other. On the contrary, and in many instances policies aimed at fostering financial development and innovations have triggered recessions and in many MED countries have had detrimental effects on growth and development and have further widened the gap between the rich and poor.

The MED region stands at a crossroad, with changes sweeping many of its countries and creating an environment conducive to financial and economic reform. Having missed a number of opportunities to reduce poverty and inequality, to introduce extensive financial and institutional reforms, and make substantial progress in financial inclusion, more effort still needs to be devoted in the future. The social movements in the region and the earlier series of financial crises have exposed the weaknesses of the adopted financial development model and have raised questions as to how to reshape financial policies most effectively and create the space to address the needs of everyone in society, reaching even the most deprived. The slow pace of financial development and liberalization policies adopted in most MED countries in the past has yielded a relatively acceptable level of economic growth and, in general, managed to meet the goals of economic and financial stability. Oil booms have generated acceptable growth rates, with oil-abundant MED countries delivering much more than those less developed. However, the impact of such economic and financial policy choices has not led to the desired outcomes in terms of human development, poverty reduction and financial stability. Growth has not been inclusive and has widened the gap between the rich and poor; a case in point is Egypt and Morocco. Indeed, in certain cases, financial liberalization has actually contributed to further financial instability. In light of a critical reassessment of the achievements and failures of MED countries, a new financial development approach should be adopted. This new model should be more holistic, integrating the financial and social spheres in combination with strong financial institutions. It is vital that MED policymaking should expand to accommodate these spheres and place them on equal footing in the service of a long-term rights-based financial developmental vision.

The new model will reconsider financial policies that incorporate developmental priorities and would thus achieve structural change. Financial policies will have to be reshaped to achieve not only financial stabilization, adjustment and economic growth, but to also trigger the transformation required to generate growth that is broad-based, inclusive and sustainable. Within this context, such policy tools as financial development and inclusion, and financial sector diversification and liberalization will have to be addressed. At the same time, financial policies should not shy away from meeting the same objectives as social policy under this new financial development paradigm, in which the interests and welfare of every person in society are the target. It is also of central importance to ensure that social policy goes hand-in-hand with financial development policies to bring about the required transformation and ensure inclusive financial and economic growth. While the social and financial spheres should interconnect to create synergies, this new financial development model will not achieve its goals if political and institutional reforms remain shallow. Finally, sustainable poverty and income inequality reduction requires an acknowledgement that politics, institutions, financial and socio-economic policies are intertwined and have an impact on each other. Synchronizing financial and social policies with institutional and political reform would bring about positive, sustainable change under a clearly defined financial development vision.

FEMISE MedBRIEF 23: “Developing Social Entrepreneurship and Social Innovation in the Mediterranean and Middle East”

Tallie Hausser, Constantin Tsakas and Karine Moukaddem

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region.The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

The MED BRIEF “Developing Social Entrepreneurship and Social Innovation in the Mediterranean and Middle East “, is available here.

 

Summary

Our Policy Brief analyzes the social innovation ecosystems in Beirut and Tunis and discusses ways for leading to inclusive innovation that creates jobs, income and opportunities for marginalized populations, women and youth. Findings show that the lack of a legal form for social enterprises, impediments to financing and investment, scarcity of human resources for upper management and difficulties in determining the proper customer base are among the core obstacles faced by social entrepreneurs. We argue that more innovative financing mechanisms should be available for them. Educating investors in the South Med around the concept of impact measurement and impact investment would be needed. In addition, South Med governments ought to actively support social enterprises, meanwhile, corporations should be considering social procurement and including social enterprises in their supply chains. Finally, capitalizing on Euro-Med cooperation could be an inclusivity game-changer. Specifically, an EU-Med Social Impact Platform could multiply funding opportunities for South-Med entrepreneurs and provide a promising market for impact investors.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union

“Renewable Energy Development Strategies in the MENA Region” (Report FEM43-04)

This work explores the question of the dynamic link between the development of renewable energies and growth. The main results of this work can be summarized as follows. First, the results show that efforts to develop renewable electricity generation must be supported in the short term because the relationship between renewable electricity production and GDP per capita is asymmetrical. In this case Algeria, Egypt, Morocco and Turkey are concerned by this strategy which will enable them to increase well-being in the long term. Second, the current level of renewable electricity generation in Tunisia and Israel is low enough to have a significant effect on welfare. Both countries must therefore continue their efforts to produce renewable electricity in order to reach levels that allow them to have an impact on well-being. Thirdly, Iran and Lebanon are in a strategy that has a negative impact on welfare, namely hydroelectric power generation. They must try to develop other sources of energy by exploiting their potential in wind and solar energy.

FEMISE MedBRIEF 22: “Evaluation of IMF reform programs in a period of political transition…”

Prof. Sami Mouley

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region.

The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

The MED BRIEF “Evaluation of IMF reform programs in a period of political transition and in a context of macroeconomic steering vulnerabilities”, is available here.

 

Summary

Applied to the reform programs initiated by the IMF in the Arab Spring countries (Egypt, Jordan, Morocco and Tunisia) during the transition period, this Brief is based on a recent research report FEMISE N ° 42-08, led by Prof . Sami Mouley with the participation of R. Baccouche and Y. Kocoglu, entitled “Vulnerabilities of Macroeconomic Management and Evaluation of IMF Reform Programs in Political Transition Periods: Specific Case of Tunisia and Compared Experiences with Egypt”.

The purpose of this report is to fill a knowledge gap on how to take into account reform evaluation methods. It attempted to provide parametric responses to the ex-post evaluation of IMF reform programs. Overall, the results show that when these programs, although appropriate, are not always followed by a positive effect on growth, the explanation should rather be sought in terms of the effectiveness of reforms, ie, of compliance ( compliance) of the structural benchmark countries of the economic policy actions contained in these programs. Delays (or dysfunctions) in the implementation schemes of the reforms would be attributed either to conditions exogenous to the programs (political or security uncertainties linked to an indicator variable tracing the effects of the Arab Spring), to defects in economic and institutional governance, poor allocation of resources and other non-productive aspects of public spending, which may be at the root of the slowdown in economic growth. By contrast, when structural benchmarks are fully met, the effects of these programs on growth could be potentially positive.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union

FEMISE MedBRIEF 21: “Catalyst for Empowering Women and Gender Equality : The case of Egypt”

Doaa Salman and Mohga Bassim

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region.

The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

 

 

 

The MED BRIEF “Catalyst for Empowering Women and Boosting Gender Equality in South Mediterranean Countries: The case of Egypt”, is available here.

 

Summary

This policy brief proposes and recommends further policies to urgently, strengthen the current quest for empowering women and for reducing inequality in the Mediterranean countries and specifically in Egypt. It seeks to provide a policy-mix for additional policies that also contribute in achieving sustainable development.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union

FEMISE MedBRIEF 20: “The Long-Term Impact of Syrian Refugees on Turkish Economy”

Pr. Ramon Mahia (UAM, Spain) and Pr. Ali Koc (Akdeniz University, Turkey)

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region. The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

The MED BRIEF “The Long-Term Impact of Syrian Refugees on Turkish Economy”, is available here.

 

 

 

Summary

Results for 2017 (short term impact)
• The total value-added impact generated by the occupations of Syrian refugees in the Turkish economy was an estimated 27.2 billion TL at the end of 2017, representing 1.96% of total Turkish GDP.
• Production effect is estimated at 1.51% of GDP for 2017. This impact supposes an increase in production of 30.59 billion TL across different sectors, generating 20.9 billion TL of value added.
• Induced demand effect accounts for the rest of global impact, for 0.45% of GDP in 2017. This induced demand effect implies new production estimated at around 11.7 billion TL, generating 6.2 billion TL in value added. This induced demand effect is essentially produced by direct consumption and investment of Syrian population; the direct effect is estimated at 0.3% of GDP for 2017.
• All in all, native employment induced by Syrian economic integration (from both production and demand effects) was an estimated 132,454 persons in 2017.
• The direct impact of Syrian economic integration is spread unevenly across different sectors, reflecting the greater or lesser presence of Syrian workers in the production effect and specific consumption and investment patterns.
• Details provided by the simulation schema support the idea that enhancing employment opportunities for refugees by improving their education and skills, promoting entrepreneurial capacity and providing work permits in well-targeted sectors will further increase refugees’ contribution to economic growth.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union

FEMISE EuroMed Report 2019 : The private sector in the Mediterranean countries: Main dysfunctions and opportunities of social entrepreneurship

ENGLISH VERSION coming soon…

 

Le Rapport EuroMed FEMISE 2019 est maintenant disponible

Le secteur privé dans les pays méditerranéens :

Principaux dysfonctionnements et Opportunités de l’entreprenariat social [1]

La version française du rapport est disponible au téléchargement ici.

Le FEMISE lance son rapport Euro-Méditerranéen 2019 qui porte sur le secteur privé dans les pays méditerranéens. Il a été présenté ce 13 juin dernier aux participants à la conférence annuelle du think tank. Comment ont évolué les pays méditerranéens depuis le lancement du Processus de Barcelone ? Pourquoi la croissance a-t-elle été en deça des attentes ? Quelle rôle peuvent jouer les Banques Centrales pour rendre le secteur privé plus dynamique et attirer davantage d’investissements étrangers ? Comment les pouvoirs publics peuvent-ils contribuer au développement de l’entreprenariat social dans la but de réduire les phénomènes d’exclusivité ? Ce rapport tente de répondre à ces questions à travers 4 chapitres : le premier présente la dynamique observée des pays méditerranéens au cours de ces 20 dernières années ; le second tente d’analyser les principales raisons du manque de croissance ; le troisième porte sur le rôle des Banques Centrales dans l’amélioration de l’environnement des affaires et sur l’attractivité des investissements étrangers. Le quatrième et dernier chapitre est focalisé sur l’entreprenariat social.

Trois raisons majeures ont poussé les experts du réseau FEMISE a consacrer ce rapport au secteur privé en Méditerranée. La première est qu’il y a urgence à créer des emplois et, compte tenu de la situation des comptes publics, ces futures créations d’emplois ne pourront provenir que du secteur privé. La deuxième raison est que ces pays doivent faire évoluer leur régime de croissance pour devenir plus compétitifs et réaliser des montées en gamme. La troisième raison est qu’il était utile, comme le fait ce rapport, d’avoir une synthèse des apports de la littérature académique, des données disponibles, des rapports d’organisations internationales tout en ayant également un tour d’horizon sur les points de vue et recommandations d’experts, membres de la société civile et partenaires opérationnels sur le sujet. Dans le dernier chapitre, ces acteurs du changement exposent et proposent des actions concrètes pour un secteur privé à la hauteur des enjeux en Méditerranée, notamment via l’entreprenariat social.

« Un paradoxe des pays méditerranéens est d’avoir, à la fois, un faible niveau de pauvreté comparativement aux pays en développement et émergents et, dans le même temps certaines parties de la population isolées et/ou exclues de la sphère économique. Il s’agit des jeunes, des femmes et du monde rural éloigné des grandes agglomérations. On pourrait également y ajouter les personnes dont les activités économiques sont dans l’informel. C’est donc un système économique qui repose sur l’exclusion d’au moins les deux tiers de sa population et dont les fondements d’un développement durable ne sont pas assurés » expliquent les auteurs.

Le rapport, produit sous la direction de l‘Institut de la Méditerranée (IM) et coordonnée par Patricia Augier (Présidente du Comité Scientifique du FEMISE), a été rédigé par des économistes du réseau de chercheurs FEMISE. Les auteurs sont :.

Pr. Patricia Augier (Professeur Aix-Marseille School of Economics, Présidente du Comité Scientifique du FEMISE et de l’IM) ;

Dr. Constantin Tsakas (Secrétaire Général du FEMISE et Délégué Général de l’IM) ;

Pr. Sami Mouley (Professeur de Finance Internationale à l’Université de Tunis) ;

Karine Moukaddem (stagiaire analyste politique à l’Union pour la Méditerranée, experte FEMISE) et

Jocelyn Ventura (économiste à l’IM et au FEMISE).

Les 4 chapitres sont également téléchargeables séparément en cliquant ci-dessous :

Le rapport Euromed est une publication annuelle du FEMISE qui traite des thèmes d’importance et d’intérêt pour la région Euro-Med. Le rapport apporte une véritable valeur ajoutée en termes de connaissances sur le thème couvert. Il fournit une analyse approfondie proposée par des économistes spécialisés et avec une approche pluridisciplinaire du Nord et du Sud de la Méditerranée. Cela apporte une vision commune des deux rives de la Méditerranée et des recommandations politiques qui peuvent contribuer au processus de transition des pays du Sud Med.

[1] Ce rapport a reçu un soutien financier de l’Union européenne à travers le projet FEMISE “Support to Economic Research, studies and dialogues of the Euro-Mediterranean Partnership”. Toute opinion exprimée dans ce rapport est de la seule responsabilité des auteurs.

FEMISE MED BRIEF no19 : “Reforming Fossil fuel Subsidies: Challenges and Opportunities for Mediterranean countries”

Stéphane Pouffary & Guillaume de Laboulaye

The FEMISE Policy Brief series MED BRIEF aspires to provide Forward Thinking for the EuroMediterranean region. The briefs contain succinct, policy-oriented analysis of relevant EuroMed issues, presenting the views of FEMISE researchers and collaborators to policy-makers.

The MED BRIEF “Reforming Fossil fuel Subsidies: Challenges and Opportunities for the South and East Mediterranean countries”, is available here (in french).


Abstract: Fossil fuel subsidies have been used for decades to support economic activities, but above all, officially, to enable poorest households to access low-cost energy services. That being the case, regardless of the country, this reality remains highly questionable given that most of these subsidies benefit the wealthiest households who consume much more energy than lower and middle-income households. Moreover, these subsidies are incompatible with a low-carbon society and they contribute to maintaining unsustainable systems from an environmental, economic and social point of view, creating an energy dependence on exporting countries. This policy brief focuses on the issues and challenges of reforming fossil fuel subsidies in Southern and Eastern Mediterranean countries. It reminds that, far from their initial objective, these subsidies contribute on the one hand to slow down the achievement of national climate commitments and, on the other hand, to increase social and economic imbalances.

The list of FEMISE MED BRIEFS is available here.

The policy brief has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union

Med Change Makers e08 : Vera DANILINA, Green Public Procurement Vs. Environmental taxation: potential for EuroMed environmental cooperation

 

FEMISE launched in 2018 its series of interviews called « Med Change Makers ».

« Med Change Makers » are text and video-based interviews that allow dynamic researchers of the FEMISE network to illustrate how their research addresses a policy-relevant question and how it contributes to the policy-making process in the Euro-Mediterranean region.

 

Green Public Procurement Vs. Environmental taxation: potential for euro-mediterranean environmental cooperation

Interview with Vera Danilina, Aix-Marseille Université and FEMISE

Environmental issues are among the priorities of FEMISE research / action. In the Mediterranean, the consequences of climate change will always be stronger than elsewhere. The reduction of greenhouse gas emissions and the adaptation needs of bordering countries are more than ever necessary.

Author of a FEMISE MED BRIEF, Vera Danilina focuses on environmental taxation and green public procurement (GPP). She provides a comparative analysis of their effectiveness and reveals the opportunities for harmonized environmental policy between countries. Her results suggest specific implications for environmental collaboration between EU countries and those of the MENA region (Middle East and North Africa). Interview :

1. Your recent FEMISE Brief is focused on the comparison between GPP and environmental taxation. What are these two policy instruments and why do you focus on them ?

The first instrument is Green Public Procurement and is related to the process whereby public authorities seek to procure goods and services with reduced environmental impact. Accordingly, it corresponds to their initiative to consume eco-friendly products. This policy instrument is relatively new: within the EU the importance of GPP was stressed in 2003 when the member states were urged to adopt national plans for greening the public purchasing policy. Despite the relatively slow development of GPP, 55% of the contracts signed by European public authorities in 2009/10 included at least one EU core GPP criterion.

The second instrument, which is the environmental tax, targets directly the negative impact of production. Nowadays, in the EU-28 such taxes account from 30-50% (UK, Belgium, Italy, Denmark) to 60-80% (Germany, France, Norway) and even to 80-100% (Spain, Liechtenstein) of all key environmental policy instruments in use. Environmental taxation accounts for 2.4% of the EU-28’s GDP varying from 0.77% in Liechtenstein to 4.14% in Denmark.

Why focus on these two policy instruments? First of all, because they belong to alternative approaches to regulation that feature mandatory vs. voluntary participation and direct vs. indirect influence. The second reason is that while environmental tax can be considered as one of the most or even the most widely used policy instruments, the expansion of GPP is much more modest. But at the same time, GPP has been constantly high on the policy agenda of different countries since 1970s that shows its expected potential in the environmental policy development. Thus, the main reason to choose taxes and GPP for our analysis is to investigate the pros and cons of a traditional and a relatively innovative policy instrument exploring their possible complementarity or/and substitutability.

2. Are economic instruments for environmental policies widespread in Mediterranean countries of the South shore and why (not) ? Are there South-Med success-stories ?

The South-Med countries are mostly focused on the environmental taxation as the more transparent and straightforward instrument: it represents from 64% (Israel) to 100% (Egypt, Tunisia) of key environmental policy instruments toolkits. Meanwhile, in the majority of countries they represent a relatively modest share of GDP. At the same time in Israel green taxes account for 3% of GDP and 2% – in Morocco which is in line with European practices.

Public purchasing accounts for around 18% of GDP within the MENA region indicating a significant potential to influence markets and industries. Green procurement is not widely developed though. However, we would mention such countries as Israel, Egypt, Morocco and United Arab Emirates as leaders in GPP movement. According to the Ecolabel Index, there are up to 20 eco-labels in each of these countries including such nationally developed green standards as “Green Star” label for the responsible tourism in Egypt or a multi-industrial Israeli Green Label. These countries have also launched a range of governmental programmes supporting eco-innovations.

In general, environmental regulation is not well-developed in the South-Med countries. Among the reasons we would mention a wide range of social and economic problems that seem to be more urgent. At the same time we observe the development of environmental policies that indicates the growing understanding of their importance.

3. How can environmental policies and instruments in the South Med co-exist with the social and economic difficulties these countries are facing ?

It is well-known that the South Med region experiences a wide range of social and economic difficulties that might seem to be much more important than ecological threats. At the same time, the costs of environmental degradation for this region ranges from 2-3 % of GDP in Tunisia, Jordan, and Syria, to 5-7 % of GDP in Egypt and Iran. These figures are impressive. They assure that without developing green policy, the South Med countries risk to deepen not only the ecological problems but also the social and economic difficulties.

Moreover, focusing on economic development without corresponding environmental restrictions could potentially aggravate environmental degradation worsening the quality of life of the population. As an example, we would particularly stress health problem that can drastically reduce GDP. The link between environment, health, and GDP is potentially strong in the absence of environmental regulation and in the presence of “basic” threats such as car emissions, for example, that most directly affect the population.

4. How important is the coordination of environmental policies across South Mediterranean countries and why ? What direct and indirect benefits ?

Our research urges for the policy harmonisation across trading countries. We see this strategy as a first-best or a “win-win” option that allows the actors to coordinate their environmental efforts without implicating any disproportional burden to any of them.

Otherwise, the countries who focus more on the environmental regulation could be demotivated by the return effect of international trade. Thus, the country who opts for more severe environmental taxation wins from trade integration with the country who introduces GPP or lower taxation. In the literature this phenomena corresponds to a “pollution haven effect” by which trade integration makes polluting industries move from countries with more severe to countries with less severe environmental regulation, while not necessarily leading to the reduction of global environmental degradation. If all countries opt for the GPP policy, the more environmentally virtuous country whose government spends more on green goods faces purchasing power decline while the less environmentally virtuous country whose government is less generous in environmental spendings gains. In our research we call this result a “paradox of virtue”.

Last but not the least is the argument of trade and environment complementarity. When environmental policies are identical both in their type and stringency, trade integration leaves the environmental degradation level unchanged but incurs an increase in purchasing power across trading countries.

Consequently, on the side of direct benefits of policy harmonisation we would mention environmental degradation decline and the equality of the policy burden. Talking about the indirect effect, we definitely stress the positive effects of the regulation to the business traditions as well as consumer preferences. Even more, harmonised policy implies the harmonisation of eco-standards across countries that simplifies the cross-country cooperation, joint ventures development, and public control.

5. How can collaborating with the EU, within the framework of EuroMed cooperation, provide answers to environmental concerns ?

The EU is known for its well-developed system of environmental regulation that can be seen as one of the examples to spread to the South-Med countries. Both the public and the private institutions of the EU contribute to the system of eco-labelling and eco-certification, influencing the choice made by consumers and enterprises. Thus, Germany and Austria are the pioneers of GPP programmes. Since 2008 the European Commission has developed more than 20 common GPP criteria covering a wide range of sectors.

The EU has also proposed criteria of two different types, core and comprehensive. Core criteria address the key ecological impacts and are easy to get verified while comprehensive criteria are stricter and more complex requiring additional verification efforts. The variety of criteria guarantees the flexibility of the GPP strategy that can be tailored to the needs of a particular industry and country.

6. Are there other frameworks of cooperation (regional, bilateral) that can benefit the South ?

We particularly stress coordinated GPP as a form of cross-country environmental support. Our research shows that GPP can be related to the environmental support across countries when one can be a donor, and another one – a recipient. A country that has higher financial and institutional capacity to develop GPP can increase its green public spending allowing a country that has lower financial and institutional capacity to develop GPP to benefit from the green demand of the partner country. Donors are in the position to set the standards and quality control that allows to diminish or even avoid greenwashing and, at the same time, propagate the corresponding ecological standards to the recipient. By getting accepted, the environmental criteria system could uniform the rules for companies in all participating countries facilitating their access to the markets and diminish the environmental degradation. This approach could be considered for the collaboration of EU and MENA countries in order to strengthen the environmental policies in the latter and establish a first step towards the harmonisation of green policy approaches.

7. What is your top-recommendation for South Med officials ?

First of all, we recommend the wide implementation of GPP as an efficient approach to environmental policy design. Despite being a voluntary tool, it can motivate firms to opt for green technologies even when the only incentive is originated from the government. The effect can be amplified by taking into account the consumers eco-biased demand that, in its turn, can be boosted by the corresponding public policy. At the same time, GPP is not risk-free: the absence of public monitoring can diminish the positive effect of the policy approach allowing firms to greenwash, or cheat on the environmental quality of their products. Accordingly, a corresponding monitoring policy is required.

Second main recommendation is to opt for the long-term environmental policy harmonisation even across countries with different level of economic and institutional capacity to introduce symmetric policy instruments.

The coordination of environmental policies is of particular importance for the South Mediterranean countries in view of meeting the Sustainable Development Goals (the UN, 2015), as well as for two following reasons. First, a relatively low share of intra-regional trade with the EU which is expected to increase due to the current policy agenda of the Euro-Mediterranean trade partnership. Thus, further trade liberalisation will increase the opportunities for cross-region cooperation and an environmental policies harmonisation could be key to avoid the above mentioned “pollution haven effect”. Second, the decline in economic growth in the MENA region that could potentially be partially restored with the contribution of a deeper trade integration. At the same time the environmental degradation increase that might correspond to economic growth can be mitigated by the environmental policies coordination.

Interview by Constantin Tsakas

This activity received financial support from the European Union through the FEMISE project on “Support to Economic Research, studies and dialogues of the Euro-Mediterranean Partnership”. Any views expressed are the sole responsibility of the speakers.