I am pleased to present this first edition of the UfM Progress Report on Regional Integration at a time when the Union for the Mediterranean Region (and the whole world) experiences the wind of change brought about by the digital and value-chain disruptions and awakens to the immensity of the socio-economic losses triggered by the current COVID-19 pandemic. It is precisely at this threshold of a new era that the case for reinforced regional integration becomes more than evident; it becomes a vision for confronting a broad array of challenges, the scale and scope of which are beyond the capacities of any one country or entity.

The countries of the Euro-Mediterranean region share a wealth of historical and cultural links that have shaped some of the most brilliant pages of human history. Today, this part of the world also shares a series of important challenges that demand urgent policy responses. From climate change to youth employment; from a wise management of the movement of people to an effective response to the impact of the COVID-19; the need to articulate and implement ambitious strategies is evident. For the OECD, the Euro-Mediterranean region is one of strategic relevance, a unique combination of member and partner countries that are linked through a regional policy dialogue facilitated by the Middle East and North Africa-OECD Initiative on Governance and Competitiveness for Development. Regional integration is a central focus of this initiative, an instrument for countries to build inclusive, resilient and sustainable economies in line with the 2030 Agenda for Sustainable Development. The OECD works side by side with the Union for the Mediterranean to realise this common purpose within the framework of a long-standing and valued partnership.

25 years after the Barcelona Declaration, the importance of strengthening policy dialogue across the Mediterranean has not diminished. On the contrary, regional co-operation remains a strategic objective for the member countries of the Union for the Mediterranean (UfM), given the common challenges faced by countries in the region, many resulting from global trends. They also need to ensure that recovery from the COVID-19 crisis leads to greener, more prosperous and inclusive societies in the region. The shared long-term vision is one of stability and prosperity of the region, where people, especially women and youth, can meet their hopes for the future, enjoy their rights and live in a peaceful and secure environment.

Regional Integration in the Union for the Mediterranean: Progress Report monitors integration in the Euro-Mediterranean region, with the aim to provide evidence-based policy recommendations. The Progress Report features the analysis of key quantitative and qualitative indicators of integration in five areas, notably: trade, finance, infrastructure, movement of people, and research and higher education. The selection of indicators for each integration area built on the literature on economic integration and brainstorming on the pertinence of given measures for monitoring integration in the Union for the Mediterranean. Also, a fresh perspective was taken when necessary to ensure the choice of meaningful indicators in the context of the UfM. The final selection of indicators reflects considerations about geographical coverage and data quality, relevance and availability, and relative ease of interpretation of the results.

In 1995, countries from the Northern and Southern shores of the Mediterranean decided to reinforce links that had existed between them for centuries – to build a future of peace, stability and prosperity for the region. This was the beginning of the Barcelona Process, a Euro-Mediterranean partnership that in 2020 celebrated its 25th anniversary. A key milestone was the creation, in 2008, of the Union for the Mediterranean (UfM), with the mission of supporting regional integration and cohesion. Since then, the UfM has worked to promote regional cooperation, building on dialogue and the implementation of projects and initiatives with tangible impact on the region’s citizens.

This chapter studies the dynamics of trade integration in the Euro-Mediterranean region since the launch of the Barcelona Process in 1995. It  analyses the evolution of trade flows within the region and with the rest of the world, focusing on patterns at the sub-regional level to observe progress of trade integration besides trade between EU and non-EU countries. The chapter considers key dimensions of integration, from the regulatory approach to participation in regional value chains to the composition of export flows. The final section presents a set of policy recommendations to support further trade integration in the region, oriented towards more competitive, diversified and resilient economies.

Regional financial integration can bring long-term growth benefits, notably through greater capital flows, technological transfer and risk diversification. This chapter discusses financial integration in the Union for the Mediterranean region. The analysis acknowledges that full benefits from financial openness are possible only in the presence of policies that strengthen local financial markets and regulatory and prudential frameworks. This is a priority for Middle East and North Africa (MENA) and Western Balkan sub-regions, which feature relatively low levels of financial development. These regions can reap the benefits of a more effective implementation of the regulatory frameworks for investment, with a deepening of South-South and other sub-regional investment flows. Remittances represent a significant inflow in the Southern and Eastern Mediterranean that would greatly benefit from the establishment of practical formal frameworks for money transfer.

This chapter examines infrastructure integration and the role of infrastructure for economic integration in the Euro-Mediterranean region. It covers regional transport and electricity networks that support economic development and competitiveness at both the national and regional levels. The chapter provides policy recommendations to enhance economic integration through better development of infrastructure in the region.

Movements of people play an important role in the integration process of the Union for the Mediterranean region, given their potential to be an engine of economic and social development at the regional and the national level. This  chapter investigates the evolution of mobility of persons in the Union for the Mediterranean (UfM) region in recent decades, with a special focus on migrations and how legal and institutional frameworks on migration facilitate cross-border mobility and the socio-economic integration of migrants.

This chapter presents the current state of regional integration in research and higher education in the Euro-Mediterranean region and discusses indicators for monitoring integration and collaboration. It is based on data on research funding (including from abroad), scientific personnel, scientific co- publications, co-inventions, student and researcher mobility stocks and flows, and the internationalisation of higher education and research institutions and infrastructure. The chapter makes the case for a more holistic approach that links international co-operation in higher education and research with national reforms to connect, at the national level, the higher education and research systems of countries with industry as a way to enhance the quality of research and knowledge spill-overs for the benefit of society and the economy. Finally, it draws attention to the need to invest in, and grant access to, digital education and research infrastructures in order to accelerate regional integration through research and higher-education policies.