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Constraints on Trade in the MENA region

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  • Hirut Wolde
  • Rina Bhattacharya
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    Abstract

    In this paper we estimate gravity models to see whether trade volumes of countries in the MENA region are significantly lower than what would be expected given their economic, cultural and geographical characteristics. Our empirical results show that the variables used in standard gravity models cannot explain a significant part of MENA''s trade performance, particularly on exports. We then go on to ''augment'' the standard gravity model with relevant variables from the World Bank''s Business Enterprise surveys. Our results further show that these variables, and in particular transport constraints and inefficiencies in customs clearance processes, are important in explaining the MENA region''s underperformance in trade.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/31.

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    Length: 19
    Date of creation: 01 Feb 2010
    Date of revision:
    Handle: RePEc:imf:imfwpa:10/31

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    Related research

    Keywords: Trade; Exports; Imports; Transport; Customs administration; Economic models; Labor supply; Skilled labor; Tariff structures; Trade policy; gravity model; customs regulations; survey; dummy variable; surveys; equation; trade volumes; bilateral trade; trade performance; international trade; standard errors; trade regimes; trade flows; tariff rates; trade liberalization; dummy variables; trade restrictions; political economy; statistics; transport services; trading partner; international integration; trading arrangement; imperfect competition; economic cooperation; world economy; foreign trade; bilateral trade flows; regional trade; trade effect; trading partners; international trade aspects; trade facilitation; regional integration; global trade; product differentiation; trade integration; liberalization policies; global integration; quality control; standard variables; trade exports; international standards; pattern of trade; statistical significance; trade arrangements; impact of trade; expanding trade; domestic firms; preferential trading; regional trade arrangements; import demand; trade theory; statistical methods; equations; skilled workers; free trade; export volumes; partner countries; common market; partner country; export diversification;

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    References

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    1. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 34(2), pages 430-447, May.
    2. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, Elsevier, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365 Elsevier.
    3. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, National Bureau of Economic Research, Inc, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
    4. David T. Coe & Alexander W. Hoffmaister, 1998. "North-South Trade-Is Africa Unusual?," IMF Working Papers 98/94, International Monetary Fund.
    5. Norbert Wilson, 2007. "Examining the Trade Effect of Certain Customs and Administrative Procedures," OECD Trade Policy Papers 42, OECD Publishing.
    6. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 54(1), pages 1-31, October.
    7. Stanley Fischer & Mohamed A. El-Erian, 1996. "Is MENA a Region? The Scope for Regional Integration," IMF Working Papers 96/30, International Monetary Fund.
    8. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
    9. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
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    Cited by:
    1. Jean-Pierre Chauffour & Bernard M., 2013. "Harnessing Trade Opportunities in the Middle East and North Africa," RSCAS Working Papers, European University Institute PP2013/07, European University Institute.
    2. Sekkat, Khalid, 2012. "Manufactured Exports and FDI in Southern Mediterranean Countries: Evolution, determinants and prospects," CEPS Papers, Centre for European Policy Studies 6849, Centre for European Policy Studies.

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