DISCLAIMER: Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate. The views expressed in Staff Discussion Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Over the past two years, ongoing political transitions in many Arab countries have led to social unrest and an economic downturn. This paper examines comparable historical episodes of political instability to derive implications for the near-and medium-term economic outlook in the Arab countries in transition. In general, past episodes of political instability were characterized by a sharp deterioration in macroeconomic outcomes and a sluggish recovery over the medium term. Recent economic developments in the Arab countries in transition seem to be unfolding along similar lines, although the weak external environment and large fiscal vulnerabilities could result in a prolonged slump.

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This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Regional integration has been seen in Africa as a means of encouraging trade and securing economies of scale. This paper examines in detail the prospects and challenges for trade expansion in the two most prominent arrangements in eastern and southern Africa: the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC). It finds that possibilities of growth in intraregional trade may be limited, but that the two arrangements offer opportunities for member countries to gain policy credibility for trade reforms and tariff liberalization and to address structural weaknesses. In this regard, the negotiation of the Economic Partnership Agreements with the European Union can also have a significant impact.

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