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Economic integration is an important means to generate income and employment, to boost investment and to spur structural transformation toward more diversified and broad-based economic models. Services do not only satisfy domestic consumption and investment demands but are also exported and used as intermediate inputs and, through their vital impact on the productive efficiency of other sectors, services are a determining factor in a country’s  participation in international production networks. Coupled with the fact that the services sector tend to account for rather large and growing shares of output, employment, and foreign direct investment, services remain a key area in deeper regional economic integration efforts to reap sizable socio-economic benefits.

In addition to taking stock of the economic integration performance of Arab countries at the individual, sub-regional, and global levels, the current edition of Assessing Arab Economic Integration Report, looks into the role and importance of services in Arab economies in terms of output, export and employment shares of the services sectors. It also explores the restrictiveness of policies and regulations affecting trade in services in the region. The report culminates in a discussion of the priorities and challenges for Arab countries in negotiating services trade agreements in light of the analysis presented.