Abstract
This paper investigates the potential impact of opening up telecommunications to competition in MENA on the sector's performance and on the participation of the region in the World economy. The latter is assessed with respect to manufactured exports, participation in production networks and attractiveness to FDI. The paper first introduces a model to assess the benefits of telecommunications liberalization on sector performance. Telecommunication liberalization is evaluated on the basis of: (i) degree of effective competition in fixed and mobile networks ; (ii) openness to foreign investment; and (iii) pro-competitive regulation. The results confirm that liberalization and open markets promote efficiency in telecommunications. Regarding the integration of the region in the world economy, the analysis confirms that, better performance of telecommunications strengthens export performance in manufacturing, including exports of intermediate products. Moreover, by facilitating linkages with transnational production networks and reducing the cost of doing business, better telecommunications performance is found to be a determinant of foreign direct investment inflows.
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