In recent decades, global value chains (GVCs) have become one of the main pillars of economic growth and industrial development. These networks of production and service activities are spread across multiple countries, encompassing everything from product design and sourcing of raw materials to final assembly and marketing. Active participation in GVCs can have significant effects on exports, job creation and technology transfer.

The experience of East Asian countries is a clear example: targeted entry into segments of global electronics and automotive chains enabled countries like South Korea and Vietnam to transform from resource-based economies into knowledge-driven, export-oriented economies. In contrast, despite the geopolitical advantages, abundant natural resources and young populations of many countries in the Middle East and North Africa (MENA), they remain on the periphery of these global networks.

This article outlines the issue from three perspectives: the impact of integration on exports and employment; its role in technology transfer and capacity upgrading; and the structural barriers that constrain the region. It concludes with policy recommendations to promote sustainable integration.

GVC participation and export-employment outcomes

Joining GVCs can create substantial opportunities for non-oil export growth. Countries such as Morocco, with entry into the automotive and aerospace industries, have managed to diversify exports and reduce dependency on natural resources. Tunisia, by attracting investment in electronics component manufacturing, has established a limited foothold in global production networks.

Beyond export diversification, integration also contributes positively to employment. Export-oriented industries typically demand workers with technical and managerial skills, which can help to reduce youth unemployment – a chronic challenge in the region. But the majority of MENA’s exports still consist of primary commodities or semi-processed goods (such as oil and petrochemicals) with limited potential for sustainable job creation and technology spillovers.

Technology transfer and productive capacity upgrading

A central advantage of GVC participation is technology transfer and organisational learning through partnerships with multinational enterprises. In East Asia, such collaborations gradually enabled domestic firms to build competitive capabilities. But in MENA, these effects have been far more limited. The main reason lies in the region’s reliance on low-value-added exports and the absence of clear industrial policies to strengthen domestic capacity.

In other words, GVC integration only translates into sustainable development when accompanied by a national industrial strategy. If countries remain confined to the role of raw material suppliers or low-value producers, they will not benefit from technology transfer and will remain highly vulnerable to global market fluctuations.

Regional experiences

• Morocco successfully attracted foreign direct investment (FDI) in automotive and aerospace, securing a position in global chains.
• Egypt participates in textiles and petrochemicals but continues to face productivity and quality challenges.
• Tunisia is integrated into electronics manufacturing, but political instability and weak business environments have undermined progress.

These cases highlight that while GVC participation in the region exists, its depth and sustainability remain limited, rarely leading to structural transformation.

Structural barriers

Four key barriers prevent MENA from achieving stable integration into GVCs:

• Bureaucratic inefficiencies and complex trade regulations that raise transaction costs.
• Insufficient infrastructure in transport, ports and digital logistics, which reduces export competitiveness.
• Skills mismatch between the requirements of global industries and the available domestic workforce.
• Institutional and political instability that undermines investor confidence.

Conclusion and policy recommendations

Integration into GVCs is not a luxury for MENA countries; it is a strategic necessity for survival and advancement in the global economy. The region cannot continue to rely solely on energy exports and primary commodities, as this model is both unsustainable and highly vulnerable to market shocks.

To move towards sustainable integration and long-term development, several policy priorities stand out:

• Diversifying exports by focusing on higher-value-added goods and services, including ICT and knowledge-based sectors.
• Investing in logistics and digital infrastructure to enhance trade efficiency and reduce costs.
• Strengthening education and training systems to equip the workforce with skills in engineering, data analysis and supply chain management.
• Creating stable and transparent institutional environments by streamlining bureaucracy, ensuring property rights and maintaining policy predictability to attract both domestic and foreign investment.

Without such reforms, MENA countries will remain peripheral players in the global economy, missing the opportunities offered by GVCs. But with a coherent and forward-looking policy approach, these global networks can serve as a launch pad for export growth, sustainable job creation and technological upgrading – key steps towards sustainable development and social equity across the region.

Further reading

Ayadi, Rim, Giorgia Giovannetti, Enrico Marvasi and Chahir Zaki (2020) ‘Global Value Chains and the Productivity of Firms in MENA countries: Does Connectivity Matter?’, Working Paper No. 03/2020, DISEI, Universita degli Studi di Firenze.

Eissa, Yasmine (2025) ‘Global value chains, wages and skills in MENA countries’, The Forum: ERF Policy Portal.

Bousnina, Rihad, and Foued Badr Gabsi (2022) ‘Global Value Chain Participation, Institutional Quality and Current Account Imbalances in the MENA Region’, ERF Working Paper No. 1556.

Guedidi, Insaf, and Leila Baghdadi (2020) ‘CO2 Emissions, Environmental Provisions and Global Value Chains in MENA Countries’, ERF Working Paper No. 1428.

World Bank (2020) World Development Report 2020: Trading for Development in the Age of Global Value Chains. World Trade Organization (WTO), IDE-JETRO, OECD, UIBE and World Bank Group (2019) Global Value Chain Development Report 2019: Technological Innovation, Supply Chain Trade, and Workers in a Globalized World.