Mediterranean Politics

ISSN: 1362-9395 (Print) 1743-9418 (Online) Journal homepage: http://www.tandfonline.com/loi/fmed20

Maghreb-EU Migration: Interdependence,

Remittances, the Labour Market and Implications
for Economic Development

Abdelaziz Testas

To cite this article: Abdelaziz Testas (2001) Maghreb-EU Migration: Interdependence,

Remittances, the Labour Market and Implications for Economic Development, Mediterranean
Politics, 6:3, 64-80, DOI: 10.1080/713604532

To link to this article: https://doi.org/10.1080/713604532

Published online: 08 Apr 2010.

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 63med04.qxd 11/09/01 15:58 Page 64

MaghrebEU Migration:
Interdependence, Remittances, the
Labour Market and Implications for
Economic Development

A B D E L A Z IZ TESTAS
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The most common approach to dealing with migration flows from the Maghreb to the
European Union (EU) has been strict border checks. This approach, as shown by this
study, does not take into account the developmental needs of the sending countries.
Maghreb politicians may, as a result, find it less attractive to co-operate with their EU
partners as long as they see migration as a substitute for economic development
efforts. Such a view is particularly based on the positive effects migration is expected
to have on remittances and real wages in the migrants countries of origin.

I. Introduction
One of the main aims of the Barcelona Conference (Spain, November
1995)1 was to discuss ways to curb migration from the Maghreb2 to the
European Union (EU).3 Although the main objective was to deal with illegal
migration, slowing down if not halting other forms of migration were
also on the agenda (if somewhat less explicitly). The main reasons behind
this are economic, but other considerations may also prove to be important.4
While in principle there are several ways to curb the flow of migrants
from the Maghreb to the EU, the most common approach so far has been
strict frontier controls. This approach, however, has acquired limited
success (as evidenced by the continuing flow of migrants) because the
emphasis on border checks involves an underestimation of the real factors
determining migration. By taking this approach, governments in the EU
have not only deprived themselves of possible instruments to regularize and
control the flow of immigrants, but also actually have encouraged illegal
migration [Giubilaro, 1997].
The failure of EU governments to understand the developmental needs
of the Maghreb countries is at the heart of the problem. Naturally, North
African politicians will find it unattractive to co-operate with their EU

Abdelaziz Testas is currently a lecturer in Economics at the Shandong Finance Institute, Jinan,
China. He received his Ph.D. from the University of Leeds in 1997.
Mediterranean Politics, Vol.6, No.3 (Autumn 2001), pp.6480
PUBLISHED BY FRANK CASS, LONDON
 63med04.qxd 11/09/01 15:58 Page 65

M A G H R E B E U M I G R AT I O N 65
partners over migration so long as they expect significant economic benefits
to be reaped from it. Emigration, for example, is expected to ease the
pressure on the labour market, reduce unemployment, increase real wages,
create a more skilled labour force and generate cash remittances. This
suggests that only when politicians on the other side of the Mediterranean
recognize the developmental needs of the Maghreb will migration policies
lead to tangible outcomes.
One approach that recognizes these needs and works as a complement
(if not an alternative) to stricter border controls is one that contributes to
Maghreb economic development. When the North African economies
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expand and more jobs are created, living standards will rise and political
stability will be maintained. Maghreb politicians will cease to see migration
as a source of revenue and migrants themselves will find it less attractive to
leave their country of origin.
The main purpose of this article is to show that current EU policies
regarding Maghreb migration may not bring the expected results. In other
words, strict border controls may not halt the influx of immigrants. A more
viable approach would be to find ways to contribute to Maghreb economic
prosperity so differences in living standards between North and South
become less pronounced and eventually cease to serve as pull factors.
The rest of this article is organized in five main sections. Section II
shows that migration from the Maghreb to the EU is best understood as a
logical outcome of the growing interdependence between the Maghreb and
the EU. Section III provides evidence of the importance of remittances to
Maghreb economic development. Section IV examines the impact of
migration on the labour market. Section V describes the elements of a
developmental approach that could work as a complement, if not an
alternative, to strict border controls. A final section provides some
conclusions and their policy implications.

II. Migration and MaghrebEU Economic Interdependence

Although the literature on Maghreb migration is vast, most of it is confined
to the study of the impact of migration flows on the host economies. Studies
that try to explain why migrations occur in the first place are lacking. One
exception is Giubilaros study [1997], but even this does not consider
interdependence as a major factor determining the flow of migrants.
The issue of interdependence may be best explained in terms of
variations in the EU and Maghreb real GDP growth rates. After all, it is
variations in such components that will determine variations in
unemployment rates, living standards and, hence, the flow of migrants.
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66 ME D I T E R R A N E A N P O L I T I C S

Figure 1 shows real GDP growth rates of the Maghreb countries plotted
against real GDP growth rates of France.5 The choice of this country as a
representative of the EU as a whole stems from its special status in the
Maghreb owing to historical reasons. There is also the fact that France itself
is the host of a large number of Maghreb migrants.
The figure illustrates that differences in real GDP growth rates in the
Maghreb are similar to differences in real GDP growth rates in France; the
correlation between the two series, as shown in Table 1, is 0.87 for
Morocco, 0.79 for Tunisia and 0.16 for Algeria. These similarities, however,
are more evident in Morocco and Tunisia as shown by the high coefficient
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F I GURE 1
MAGHRE B- F RANCE I NT E RDEPEN D EN CE, 197391

Algeria

- - - - - Algeria
Algeria France
France

Morocco

- - - - - Morocco
Morocco France
France

Tunisia

- - - - - Tunisia
Tunisia France
France
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M A G H R E B E U M I G R AT I O N 67
TABL E 1
C O R R EL AT I ON COE F F I CI E NT S BE T WE E N MA G H REB A N D FR EN C H R EA L
G D P G R O W T H R AT E S , 1 9 7 3 9 1

Country Correlation Coefficient

Algeria 0.16
Morocco 0.87
Tunisia 0.79

Source: World Bank, World Tables, 1994.

of determination, R2. According to this, 75 per cent of variations in

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Moroccos real GDP growth rates can be explained by variations in real

GDP growth rates in France. Similarly, 63 per cent of variations in Tunisias
real GDP growth rates can be explained by variations in real GDP growth
rates in France.
The data from Figure 1 also suggest that, other things being equal, an
increase in Frances real GDP growth rates by 1 per cent would increase real
GDP growth rates of Morocco and Tunisia by about 0.80 and 0.56 per cent,
respectively.6 The lower, but still reasonably high, regression coefficient for
Tunisia reflects a greater diversification of the countrys economic (trade)
relations with the EU member states.
The weak dependency of Algerias economy on that of France is
somewhat surprising. The results indicate that only about three per cent of
variations in Algerias real GDP growth rates can be explained by variations
in Frances real GDP growth rates. This conclusion, however, as can be seen
from Figure 1, does not apply to the 1970s as the correlation coefficient
between real GDP growth rates in the two countries is as high as 0.97.
Generally, the weakening of Algerias dependency on the French economy
may be explained by efforts on behalf of the Algerian government to diversify
the countrys geographical sources of growth within the European Union.
In very broad terms, the economic dependency of the Maghreb on the
EU member economies can be explained by trade dependency ratios.
Throughout the 1990s, for example, Tunisias European partners accounted
for almost 80 per cent of its exports and more than 70 per cent of its imports.
In Algeria, more than 60 per cent of imports and 70 per cent of exports were
effected with countries of the European Union. Since trade accounts for a
large percentage of Maghreb countries real GDP, one would expect the
expansion (contraction) of the Maghreb economies to depend heavily on the
expansion (contraction) of the EU economies. This, as Figure 1 shows, is
certainly the case with Maghreb-France economic relations.
The above analysis suggests clearly that economic interdependence may
explain the fact that, for the Maghreb countries, European nations represent
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68 ME D I T E R R A N E A N P O L I T I C S

the main outlet for their migration flows. This, as Giubilaro [1997] has
demonstrated, is well supported by statistical evidence: Europe is the place
of residence of over 90 per cent of Algerian and Moroccan expatriates and
more than 80 per cent for Tunisians. As a result, it is estimated that up to 95
per cent of remittances transferred to the Maghreb may have originated in
Europe [Berrada, 1994].

III. Remittances and Economic Development

One of the main economic effects of international migration on the
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migrants countries of origin is the contribution provided by cash

remittances from the migrant workers [Berrada, 1994; Collinson, 1993;
Giubilaro, 1997]. The sending countries profit from the transfers of foreign
exchange, which help to improve the living standards of the families that
remain at home, and have an impact on the national economy. If such an
impact is significant, it may be expected to slow down the flow of future
migrants as the national economy expands and more jobs are created at
home.
The importance of remittances for the Maghreb economy can be gauged
by looking at Figure 2. This shows that the percentage share of these
remittances in the Maghreb countries real GDP has increased significantly.
In 1972, this share was only about 0.7 per cent in Morocco and 0.5 per cent
in Tunisia; in 1991 these percentage shares increased to 9 and 5.6 per cent,
respectively.
The expected positive relationship between remittances and real output
in the Maghreb can be tested by simple correlation and regression analysis.
Figure 3 plots real output against that of remittances on a logarithmic scale.

F I GURE 2
T H E PE RCE NTAGE S HARE OF RE MI T TA N C ES IN G D P, 1972 A N D 1991

10
8 9.0
5.6
6
4
2 0.6 1.1 0.7 0.5
0
Algeria Tunisia Morocco

1972
1972 19911991
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M A G H R E B E U M I G R AT I O N 69
F I GURE 3
OUT P UT AND RE MI T TANCE S I N TH E MA G H R EB , 197291

Algeria
1.50
Log Remittances
1.00

0.50

0.00

-0.50
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5.00 5.20 5.40 5.60 5.80 6.00

Log Output

Morocco
4.00
Log Remittances

3.00
2.00
1.00
0.00
-1.00
-2.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00
Log Output

Tunisia
0.00
Log Remittances

-1.00

-2.00

-3.00

-4.00
0.00 0.50 1.00 1.50 2.00 2.50
Log Output

TABL E 2
C O R RE L AT I ON COE F F I CI E NT S BE T WEEN MA G H R EB R EA L O U TPU T
AND RE MI T TANCES, 197291

Country Correlation Coefficient

Algeria 0.46
Morocco 0.97
Tunisia 0.99

Source: World Bank, World Tables, 1994.

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70 ME D I T E R R A N E A N P O L I T I C S

As the figure clearly illustrates, differences in real output in the Maghreb are
similar to differences in remittances. Thus, as data in the figure suggests,
about 95 per cent of variations in real output are explained by variations in
remittances in Morocco. This percentage is higher for Tunisia, reaching 97
per cent, but smaller for Algeria as the coefficient of determination, R2, is
only about 0.2. This suggests that approximately 20 per cent of variations in
real output in this country can be explained by variations in remittances; the
other 80 per cent are explained by other factors.7
The data from Figure 3 also suggest that, other things being equal, an
increase in remittances by one per cent would increase Moroccos real
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output by 0.26 per cent. Similarly, a 1 per cent increase in remittances would
increase Tunisias real output by 0.28 per cent and that of Algeria by 0.30
per cent.
The special role played by remittances in the economic development of
the Maghreb can be confirmed by looking at data in Table 2. This displays
the correlation coefficients between real output and remittances. A positive
and statistically significant coefficient would suggest that the two series are
closely related and move in the same direction. This, indeed, as the table
shows, is the case with the Maghreb countries. The correlation coefficient
is very high for Morocco (equal to 0.97) and almost perfect (equal to 0.99)
for Tunisia. For Algeria, however, the correlation coefficient is lower (equal
to 0.46) and less significant.
Remittances can affect the national economy of the Maghreb countries
through different channels. One of these is imports. Maghreb governments
can use remittances to buy capital goods that are used by local companies
for their domestic production. In fact, due to the large-scale industrialization
programmes that took place in the 1970s and 1980s in the Maghreb
countries, a positive relationship between imports and remittances should be
expected. The need for imports arose because capital goods were of primary
importance to such industrial projects. Since the amount of foreign
exchange available to the Maghreb governments was not sufficient as
industrialization created further needs, remittances played a complementary
role.
The expected positive relationship between imports and remittances can
be confirmed by performing some simple statistical tests. One of these is
correlation and Table 3 presents the estimates. The data confirms our
prediction for Morocco and Tunisia (with respective correlation coefficients
of 0.83 and 0.92) but, surprisingly, the coefficient for Algeria has the wrong
sign (equal to -0.29). The latter suggests that as remittances increase, imports
decrease. Although the reasons for this may not be straightforward, one
explanation could be that remittances are repatriated in a form other than
cash. In this case, remittances would tend to displace imports.
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M A G H R E B E U M I G R AT I O N 71
TABL E 3
C O R R E L AT I ON COE F F I CI E NT S BE T WE E N REMITTA N CES A N D IMPO RTS,
197291

Country Correlation Coefficient

Algeria 0.29
Morocco 0.83
Tunisia 0.92

Source: World Bank, World Tables, 1994.

F I GURE 4
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I MP ORT S AND RE MI T TANCE S I N TH E MA G H REB ,197291

Algeria
1.50
Log Remittances

1.00

0.50

0.00

-0.50
0 1 2 3 4 5
Log Imports

Morocco
4.00
Log Remittances

3.00
2.00
1.00
0.00
-1.00
-2.00
0.00 1.00 2.00 3.00 4.00 5.00
Log Imports

Tunisia
0.00
Log Remittances

-1.00

-2.00

-3.00

-4.00
0.00 0.50 1.00 1.50 2.00
Log Imports
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72 ME D I T E R R A N E A N P O L I T I C S

The close connection between imports and remittances in Morocco and

Tunisia is confirmed by data in Figure 4. The regression results indicate
that, other things being equal, an increase in remittances of 1 per cent would
increase imports by about 0.20 per cent in Morocco and 0.33 per cent in
Tunisia.

IV. Migration and the Labour Market

The analysis so far indicates that there is a close relationship between
remittances, on the one hand, and output and imports, on the other. This
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relationship is particularly strong in the case of Tunisia and Morocco.

The implications of this are straightforward. Maghreb politicians may
not co-operate to the full with the EU partners in issues regarding migration
because they see the latter as assisting economic development efforts. Given
the significant share of remittances in total GDP of the Maghreb,8 North
African governments may in fact wish to see their workers migrate.
On the other hand, the role played by remittances in economic
development is not the only reason why the authorities in the Maghreb
countries have long accepted the emigration of their workers. The impact on
the labour market is particularly important. More precisely, emigration is
expected to increase real wages at home and decrease the number of
unemployed.
Real wage differences between the EU and the Maghreb are themselves
a stimulus for migration. Real wages in the Maghreb are expected to be far
lower than those in the EU countries because of higher labour productivity
in the EU, which, among other reasons, is due to faster technological
development. Reliable estimates of real wage differences are not yet
available, but some studies [e.g., Testas, 2000] have shown that the
guaranteed minimum wage in Tunisia, for example, is only about a third of
that in Spain. In fact, the average living standards in the Maghreb, as
measured by current GDP per capita in US dollars, was only about seven
per cent that of France in 1991.
The above suggests that labour flow from the Maghreb to the EU, LFME,
is a function of a wage-gap (wE wM). That is,
LFME = EM (wE wM) (1)
where wE and wM are real wages in the EU and the Maghreb, respectively,
and EM depends on barriers to migration. When mobility barriers are
extensive, EM is small.9
This model, as shown by Hansen et al. [1991], can be extended with
various variables which can improve its ability to reflect real migration
patterns. For example, it would be natural to include the differences in the
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M A G H R E B E U M I G R AT I O N 73
level of unemployment between the Maghreb and the EU. As a result,
equation (1) becomes:
LFME = ME (wE wM) + ME (UE UM) (2)
where unemployment rates (U) are included as new explanatory variables.
The higher the level of real wages and the lower the level of unemployment
in the EU compared to the Maghreb, the greater will be the migration of
labour from the Maghreb to the EU.
The impact of migration on real wages in the Maghreb can be explained
with the help of Figure 5.10 In this figure, OEOM denotes the total labour force
in the EU. Employment in EU countries is measured towards the right and in
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Maghreb countries towards the left. The marginal productivity of labour,

which corresponds to the level of real wages under perfect competition in the
labour market, is measured along the vertical axis. If the labour force and
employment in the EU are OEL0, and L0OM in the Maghreb, the difference in
real wages is wEwM. On the assumption that labour mobility is perfectly
elastic to differences in real wages, emigration from the Maghreb to the EU
will be L0L1, thus causing equalization of real wages.

F I GURE 5
T H E I M PACT OF MI GRAT I ON ON T HE L AB O U R MA R K ET IN TH E MA G H REB

W W

WE

W* E
W*

WM

OE
L0 L1 OM

On the other hand, when it comes to empirical analysis, the estimation of

Eq. (2) and the analysis of real wages (Figure 5) in the Maghreb is not an
easy task. One is particularly hindered by the fact that a complete set of data
on the variables required for estimation is not available. Nevertheless, the
following simplified versions that turned out to fit the existing data for
Algeria were tested for the period 198092:11
GF = (UA, ) (3)
WA = (FA, ) (4)
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74 ME D I T E R R A N E A N P O L I T I C S

TABL E 4
R E G R E S S I ON RE S ULT S F ROM T HE F L OW AN D WA G E EQ U ATIO N S, 198092*

Country Equation (4) Equation (6)

(Flow) (Wage)

Estimated coefficients 4.4 0.71

(2.3) (0.26)

R2 0.26 0.40

Correlation coefficient 0.51 0.63

* Standard errors in brackets.

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where GF and UA in equation (3) denote the percentage change in the total
flow of migrants, and unemployment rates, respectively, while WA and FA
in equation (4) denote real wages and the flow of migrants, respectively.
The two parameters, and , capture the impact of other missing
variables. Equation (4) is estimated in logs.
Equation (3) indicates that an increase in Algerias unemployment rates
would encourage people to migrate, so there is a positive relationship
between GF and UA. Similarly, equation (4) shows that an increase in the
flow of migrants, FA, raises real wages, WA at home.
The estimated coefficients, their standard errors and the coefficients of
determination, R2s, are reported in Table 4. This also shows the estimated
correlation coefficients between the series in question. The most striking
result is that an increase in unemployment rates in Algeria does seem to
have encouraged people to migrate. The estimated coefficient is very high
and statistically significant suggesting that an increase in unemployment
rate by one per cent would lead to an increase in the flow of migrants by
more than four per cent. The correlation coefficient is calculated at 0.51 a
reasonable estimate given the small size of the sample.
Another important result is the positive impact the flow of migrants may
have had on real wages in Algeria. It is estimated that an increase in the flow
of migrants of one per cent would increase real wages at home by about 0.70
per cent. This relationship is confirmed by a positive and reasonably high
correlation coefficient, equal to 0.63.
These results do not seem unrealistic, especially with regard to the
possible impact of unemployment on migration. This is likely to be the case
not only in Algeria, but also in Morocco and Tunisia. While unemployment
rates in these countries were generally low during the 1970s, they started to
rise in the 1980s and they were quite high in the 1990s. Unemployment was
estimated in 1992 at about 14 per cent in Algeria, 13 per cent in Morocco
and 16 per cent in Tunisia. In absolute figures, these translate into the
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M A G H R E B E U M I G R AT I O N 75
following: 1.5 million unemployed in Algeria, 1.1 million in Morocco and
400,000 in Tunisia [Giubilaro, 1997].
Unemployment particularly affects young people under the age of 25
and first-time job seekers. In Algeria, 67 per cent of the unemployed in 1992
were under the age of 25, and first-time job seekers accounted for about 64
per cent of all job seekers. In Tunisia, more than 45 per cent of the
unemployed in 1989 were looking for work for the first time [ibid.].
The above situation may have contributed to the rise in the flow of
migrants from the Maghreb to the EU. As a matter of fact, the above situation
is well captured by the human-capital model described by Hansen et al.
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[1991]. In this model, which differs from early analyses of migration [e.g.
Todaro, 1969] which emphasized the aggregate equilibrating effect in the
labor market and the role of urban unemployment in the migration process,
a migrant is no longer a supplier of labour but an investor. More precisely,
the migrant makes an investment decision in which the time factor is
important. If an individuals personal estimate of costs and benefits in a time
perspective gives a positive present value (PV), which corresponds to a
capital gain on human capital, emigration will follow.
Equation (5) shows the present value for a simplified case which only
includes on the benefit side the real income difference (YE YM), and on the
cost side the initial removal costs, RCEM:

PV = (YE ,t YM ,t )/ (1 + r ) RC EM
n
t (5)
t =1

where t denotes time in years, n the duration of the investment horizon and
r the rate of discount.
The human-capital model, as Hansen et al. [1991] point out, provides
several interesting results which we believe are relevant to the Maghreb
case. For example, since the duration of the investment is longer for young
people than for old ones, young people have a longer period in which they
can write off initial removal costs, so the probability is greater that young
people will move. In the case of the Maghreb, this is almost 100 per cent
possible if one takes into account the unemployment rates discussed above
for young people and the first-time job seekers.

V. Development as Complement/Alternative to Strict Border Controls

The above analysis indicates that the current strict border checks approach
to MaghrebEU migration does not take into account the developmental
needs of the sending (Maghreb) countries. Maghreb politicians may, as a
result, find it less attractive to co-operate with their EU partners as long as
they see migration as a substitute for economic development efforts. Such a
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76 ME D I T E R R A N E A N P O L I T I C S

view is particularly based on the positive effects migration is expected to

have on remittances and real wages in the migrants countries of origin.
An approach that recognized the needs of Maghreb countries and worked
as a complement, if not an alternative, to stricter border controls would be
one that contributed to Maghreb economic development. When the North
African economies expand and more jobs are created, living standards will
rise and political stability will be maintained. Maghreb politicians then
would cease to see migration as a source of revenue and migrants themselves
would find it less attractive to leave their country of origin.
One of the most comprehensive approaches to bridging the gap between
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living standards in the Maghreb and those in the EU is economic

integration. The free trade area (FTA) to be completed by 2010 is intended
to contribute to the achievement of such an objective, but one problem is
that this policy initiative attaches more weight to intra-regional trade
liberalization than to foreign direct investment (FDI).12 Indeed, as Martin
[2000] has pointed out, the Barcelona Declaration devoted only one
sentence to FDI, acknowledging its role, together with internal savings, as
the basis for economic development.
The main argument here is that opening-up to free trade while paying
little attention to intra-regional investment liberalization could result in
increased imports to the Maghreb,13 which, as Giubilaro [1997] pointed out,
would lead to a deterioration in the Maghreb countries trade balances. This
in turn would require additional efforts on the part of national economies to
limit public spending. As a result, real GDP growth rates, as demonstrated
by Testas [1999a], might decline in the short run, leading to a decrease in
real wages and living standards, an increase in unemployment rates and
hence an increase in the flow of migrants.14 As Giubilaro [1997: 43] has put
it, it is the arrival of foreign capital and the relocation of European
enterprises that will be able to generate sustained economic growth and,
consequently, provide elements allowing for alternatives to emigration, not
targeted co-operation measures or trade liberalisation on their own.
Although there are several reasons that explain the lack of FDI in the
Maghreb,15 the most important of these may include the existence of formal
and informal barriers to such investment.16 In Algeria, for example, the
government has long erected significant barriers to FDI, especially outside the
non-hydrocarbons sector. These include: (i) broad legislation governing terms
and conditions under which foreign-owned businesses can be established and
operated; (ii) screening and monitoring of investors for purposes of approval;
(iii) legislative or regulatory restrictions on the extent of foreign ownership
and control in specific sectors; and (iv) trade-related investment requirements
such as minimum export volumes; and other performance requirements for
approval to operate as a foreign-owned subsidiary.
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M A G H R E B E U M I G R AT I O N 77
There are also impediments arising from administrative procedures and
unpublished policies, structural rigidities in the Algerian market, and
political, cultural and social institutions that work to discourage foreign
inward investment.
This suggests that, for free trade to serve as a model for easing migration
pressures, the EU and Maghreb countries should speed up the process of
capital movement by creating an environment conducive to foreign direct
investment, in particular by the progressive elimination of obstacles to such
investment. The forces underlying capital movements, as shown by the
standard international investment theory, point to a tendency towards
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equalizing the wealth of different countries. As capital flows from the

relatively capital-abundant EU to the capital-scarce Maghreb, differences in
capital endowment per employed person should gradually be removed or
reduced, and at the same time differences in wealth measured as output per
employed should be reduced. Moreover, the actual transfer of capital to the
capital-scarce Maghreb may, in fact, stimulate welfare gains in this region in
another way: direct investment tends to bring along technical skills and know-
how, so the productivity of the relatively inefficient Maghreb would increase.
This would reduce geographical disparities between the EU and the Maghreb
and eventually make migration less attractive, if that, to North Africans.
Although this process of capital movement would be faster if the three
Maghreb countries were part of the European single market, experience
from other integration schemes (for example, APEC and NAFTA) indicates
that the removal of formal and informal barriers to intra-regional investment
increases the level of capital formation and technological development in
the host economies even if the latter are not members of a single market
[APEC Economic Committee, 1997]. The experience of post-Communist
China also confirms such a conclusion.

VI. Conclusions and Policy Implications

The most common approach to dealing with migration flows from the
Maghreb to the European Union has been strict border controls. This
approach, however, as shown by this study, may not succeed because it is one-
sided as it does not take into account the developmental needs of the sending
(Maghreb) countries. North African politicians may find it less attrac-tive to
co-operate with their EU partners on migration issues since they see the
migration of their workers as a substitute for economic development efforts.
Such a view is based on the fact that emigration has positive effects on
remittances and real wages in the migrants countries of origin. This article
has shown that such a relationship is particularly strong in the case of
Morocco and Tunisia.
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78 ME D I T E R R A N E A N P O L I T I C S

The implications of such findings are straightforward: EU governments

must find other ways to deal with the Maghreb if migration is to be halted
or slowed down. One step forward is to understand the fact that migration
is a logical development of MaghrebEU economic interdependence. Such
interdependence should be fostered in such a way that the gap in living
standards on the two sides of the Mediterranean is bridged.
The free trade area to be completed by 2010 is intended to contribute
to the achievement of such an objective, especially if free trade is
supplemented by intra-regional investment liberalization. As the gap in
living standards between the Maghreb and the EU is bridged, Maghreb
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politicians will no longer see migration as a substitute for economic

development efforts and, as a result, will stop encouraging their citizens
to migrate. In fact, the would-be migrants themselves would prefer to
stay at home as the reasons for migration become less strong, or even
disappear.
The policy objectives of the Maghreb governments are, therefore, to
evaluate the consequences of public policies toward EU inward investment.
Although such public policy goals may tend to be complex and at times can
involve trade-offs, the dynamic benefits of EU investment in the North
African region cannot be underestimated.

NOTES

1. This resulted in the Barcelona Declaration whose aim was to create a free trade area (FTA)
between the Maghreb and the EU by the year 2010.
2. This term is used here to denote three countries Algeria, Morocco and Tunisia involved
in the Arab Maghreb Union (AMU) of 1989.
3. EU countries traditionally affected by Maghreb migration include France, Germany,
Belgium and the Netherlands. Spain and Italy are also among the member countries now
affected by this phenomenon.
4. Economic reasons against migration in general usually centre on the expectation that
immigrants are likely to impact negatively on the wages of the native population. While the
debate on this has not yet been resolved, studies have shown that this negative impact is
likely to be very small [Borjas, 1994]. Since the volume of migration to Europe from the
countries of the Maghreb is not very considerable (about 0.5 per cent of all residents)
[Giubilaro, 1997], non-economic considerations (for examples, cultural and religious
differences and the current political situation in Algeria) may be more important (see, for
example, Geokas [1997]).
5. These are denominated in a single currency, the US dollar. The data used come from the
World Bank [1994].
6. These estimates are shown in Figure 1 as coefficients of regressions as denoted by Coef.
Their standard errors are denoted by SE in that figure.
7. It must be noted here that one is exploring a one-to-one relationship and the probability that
other factors may also be important is not zero. The current practice, however, is not
unrealistic given the small number of observations available for estimation (that is, from
1972 to 1991). There is also the fact that, although the study of migration is not a new
subject, the methods used are still provisional. In general, the issue of spurious correlation
should be borne in mind while speaking about causal relationships.
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M A G H R E B E U M I G R AT I O N 79
8. In fact, this share is even more significant as a percentage of the Maghreb countries foreign
trade. In 1991, for example, the percentage shares of remittances in Moroccos total exports
and imports were about 40 per cent and 30 per cent, respectively. For Tunisia, these were,
respectively, about 15 per cent and 14 per cent [World Bank, 1994].
9. This, as will be shown below, implies that the speed of the process of equalization of real
wages in the EU and the Maghreb is low.
10. This draws on Hansen et al. [1991].
11. Wage and unemployment statistics come from the National Office of Statistics (Algiers),
while data on the flow of migrants come from Giubilaro [1997] and the US Immigration and
Naturalization Service [1998].
12. Some studies [e.g., Gillespie, 2000] have suggested that political considerations may even
carry more weight in European strategic plans.
13. Testas [1999b] provides estimates of such increases in imports.
14. The extent of such effects, however, depends on the degree of trade liberalization. If the
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FTAs proposed in the Euro-Mediterranean Partnership (EMP) turn out to confine themselves
to tariff and import quota removal, the above impacts are likely to be smaller in magnitude
than initially perceived. This possibility should not be disregarded since it is well known that
market access to the Maghreb region is hindered not only by tariffs but also by administrative
and other non-quantitative barriers to trade. It should also be noted that the adverse effects
of trade liberalization are expected to be a short-lived phenomenon because free trade will
eventually increase efficiency and real GDP growth rates, hence employment and living
standards, which is expected to reduce migration pressures.
15. See Martin [2000].
16. In general, formal barriers refer to those stemming from government regulations and
legislation that are aimed deliberately at restricting foreign investment. Informal barriers
include policies that, while not specifically targeted at inward investment, none the less
impact on foreign investors. For example, legislative or regulatory restrictions on cross-
ownership of financial institutions that may be erected for prudential or competition policy
reasons can have the effect of restricting access to foreign firms that operate in jurisdictions
that permit such cross-ownership. Economic, political and cultural institutions that influence
the prospective profitability of inward investment may also act in non-obvious ways as
informal investment barriers.

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