This paper discusses the key reform agenda and economic characteristics of selected Middle East and North Africa (MENA) countries in comparison with transition countries in Central, East and Southeast Europe (CESEE). By looking at the latter’s transition experiences we draw policy lessons for current MENA transitions in the wake of the Arab Spring. Policies aiming at the liberalization of domestic and international markets, privatization and increased competition in the state-controlled sectors, as well as institutional reforms anchored in the international context are broadly similar tasks facing both regions. However, there are also a number of substantial differences in development levels, demographic, social and other characteristics. MENA have not (at least so far) suffered from ‘transformational recessions’ like the CESEE in the early 1990s; they were also largely spared the effects of the recent crisis which hit the CESEE disproportionally hard.
The main task in the MENA countries will typically be a thorough modernization and expansion based in part on already existing structures with the help of external assistance and foreign direct investment (FDI). Most MENA countries have been lagging behind in terms of export performance, competitiveness and trade restructuring. In contrast to the CESEE, MENA countries have failed to increase their export market shares not only in the EU but globally. Foreign capital is an indispensable component of transition, modernization and restructuring, as well as of the private sector development and job creation. Similarly, the regional integration needs to be fostered with the help of the EU and other IFIs by promoting and broadening the bilateral free trade agreements and lifting the existing barriers.
There is no guarantee for success of a transition strategy – as illustrated by the experience of CESEE. Moreover, the current global crisis makes policy implementation not easier. It is quite certain that some countries (such as Tunisia) will fare better than others (e.g. Egypt). The abundance of natural resources represents an additional challenge (Algeria and Libya vs. Russia and Azerbaijan).The existing diversity both within and between the regions compared will likely persist and affect the outcome of transition strategies.