Tunisia faces a risk of persistent economic stagnation, as it remains caught in the middle-income trap, with a manufacturing sector still insufficiently positioned in high value-added segments and limited integration into global value chains, according to a recent analysis by the Association of Tunisian Economists (ASECTU).
The study argues that reindustrialisation is a key lever for upgrading the economy. Strengthening the industrial base is essential to increase economic complexity, diversify exports and sustainably improve the country’s competitiveness.
The analysis, titled “Developing Tunisia’s manufacturing sector to promote the export of high-technology goods,” was prepared by economist Benen Alaya.
A recent World Bank development report cited in the study shows that several countries, such as Singapore, Taiwan, and South Korea, managed to escape the middle-income trap by completing their industrialisation processes.
These successes relied on a combination of factors. Taiwan invested heavily in education and innovation-driven growth supported by R&D, while Singapore focused on large-scale infrastructure investments to attract businesses and talent, alongside strategies promoting innovation, global technology transfer, economic diversification toward high value-added sectors and financial services aligned with high-tech industries. Industrialisation fosters technological progress and innovation, offering an opportunity for technological catch-up and narrowing the gap with the global technological frontier.
The report therefore stresses that developing the manufacturing sector is essential for Tunisia to produce and export high-technology goods and ultimately escape the middle-income trap.
Tunisia caught in middle-income trap
According to the analysis, Tunisia remains stuck in this trap despite its geographic proximity to Europe. High-tech goods represent only a small share of exports, while the primary sector, which generates low added value, still plays a significant role in the economy. Tunisia also struggles to integrate into global value chains.
The country’s industrialisation process, launched after independence, was prematurely interrupted in the 1990s.
Sectorally, high-technology manufactured exports remain modest. Data from the Organisation for Economic Co-operation and Development show that in 2023, only about 7.7% of Tunisia’s manufacturing exports consisted of products with high R&D intensity, well below the OECD average of around 17%.
The path forward
To upgrade exports while ensuring economic transition and sustainability, the report highlights the need for a gradual strategy aimed at achieving long-term sustainable reindustrialisation, alongside green and digital transitions.
In the short term, structural reforms are necessary, including improving the institutional framework, strengthening the efficiency of financial markets, and implementing a balanced “flexicurity” approach to the labour market to support industrial transformation.
In the medium term, Tunisia should adopt targeted strategic choices, directing investments toward priority sectors and technologically more complex products to accelerate productive upgrading.
The study recommends focusing on products with higher economic complexity but close to Tunisia’s existing production capabilities. In particular, it suggests expanding into sectors such as machinery and transport equipment, including gas and air pumps and non-electrical vehicle parts, as well as manufactured goods like rubber materials and aluminium alloys.
Conversely, food products, raw materials, and low-complexity goods offer limited prospects for upgrading.
Over the long term, Tunisia should follow a trajectory based on green and digital transformation, ensuring that reindustrialisation supports international competitiveness, technological transformation and inclusive wealth creation.
