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The aim of the present work is to test empirically the feasibility of the broad expectations regarding the effects of ENP on the EU-MED economic partnership. More specifically, it presents firstly a gravity analysis of the patterns of trade in the EU-MED area to test the actual dimension of unexploited trade as well as the level of trade potentials after the ENP and the EU-MED FTA will take place. Secondly, it analyzes the relative degree of macroeconomic instability in the region by checking the patterns of volatility of per capita consumption in the EU-MED partner countries. The gravity estimates show the existence of a large amount of unexploited trade in the context of the EU-MED partnership but a slow pace of exports’ growth performance driven by ENP and EU-MED FTA project, even in the most -optimistic- scenario. The analysis of volatility highlights the MPs low ability to maintain a stable path of consumption. Thus, MPs remain more exposed to the occurrence of the external negative covariate shocks, associated with trade liberalization, with a strong probability of long term negative effects in aggregate welfare, even in a context of positive growth. According to these first results, ENP seems to be unfit to promote further integration and liberalization in the area as well as the -stake in the internal market- for MPs. It undermines a number of key issues and collateral policies which remain fundamental for the success of the EU-MED integration process, such as the role of regional South-South integration and the adoption of early warning mechanisms and preventive policies to reduce the probability of negative shocks induced by trade liberalization.

Item Type: MPRA Paper -

Original Title: The European Neighborhood policy: towards a new EU-MED partnership?-

Language: English-

Keywords: European Neighborhood Policy, EU MED Partnership, Gravity Model, International Trade, Macro Volatility-

Subjects: F - International Economics > F1 - Trade > F10 - GeneralF - International Economics > F1 - Trade > F17 - Trade Forecasting and SimulationE - Macroeconomics and Monetary Economics > E0 - General > E00 - General-

Autor: Montalbano, Pierluigi


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