Intra-Arab Trade: Is it Too Little?

Abstract

This paper estimates a gravity model to address the issue of whether intra-Arab trade is too little. Although gravity models have been extensively used to measure bilateral trade among countries, they have - to the best of our knowledge - never been used to measure intra-Arab trade. Our results suggest that intra-Arab trade and Arab trade with the rest of the world are lower than what would be predicted by the gravity equation, suggesting considerable scope for regional - as well as multilateral - integration. The results also suggest that intra-GCC and intra-Maghreb trade are relatively low while the Mashreq countries exhibit a higher level of intragroup trade.

Keywords: Arab countries, gravity model, trade

JEL Classification: C1, F1, O4