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Determinants of Growth and Inflation in Southern Mediterranean Countries

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  • Leonor Coutinho

Abstract

Despite significant economic reforms in many Southern Mediterranean EU neighbour countries, their growth performance has on average been subdued. This study analyses the differences in growth performance and macroeconomic stability across Mediterranean countries, to draw lessons for the future. The main findings are that Southern Mediterranean countries should benefit from closer ties with the EU that result in higher levels of trade and FDI inflows, once the turbulence of the ‘Arab Spring’ is resolved, and from the development of financial markets and infrastructure. They will also benefit in keeping inflation under control, which will depend in great part on their ability to maintain fiscal discipline and sustainable current accounts. One of the main challenges for the region will be to implement structural reforms that can help them absorb a large pool of unemployed without creating upward risks to inflation.

Suggested Citation

  • Leonor Coutinho, 2012. "Determinants of Growth and Inflation in Southern Mediterranean Countries," CASE Network Studies and Analyses 436, CASE-Center for Social and Economic Research.
    • Handle: RePEc:sec:cnstan:0436
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    2. Tsani, Stella & Paroussos, Leonidas & Fragiadakis, Costas & Charalambidis, Ioannis & Capros, Pantelis, 2013. "Female labour force participation and economic growth in the South Mediterranean countries," Economics Letters, Elsevier, vol. 120(2), pages 323-328.
    3. Robin Carruthers, 2012. "Transport Infrastructure for MED11 Countries," CASE Network Reports 0108, CASE-Center for Social and Economic Research.

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    More about this item

    Keywords

    Growth; EU neighborhood policy; Trade; FDI; Financial Development; Inflation;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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