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Econometric analysis of the bilateral trade flows in the Gulf Cooperation Council countries

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  • INSEL, Aysu
  • TEKCE, Mahmut

Abstract

This study analyzes the trade flows of the Gulf Cooperation Council (GCC) both among its member countries and with the rest of the world for the 1997-2002 and 2003-2007 periods. In this paper, the research question is whether the trade flows of the GCC countries with their partners have sustained and/or they have developed new relations over time, mainly after the 2003 Customs Union agreement of the GCC. For this purpose, fixed effects models have been estimated in order to obtain individual country effects variable. Then, trade model as a function of distance and income variables and the country effects model as a function of the time invariant control variables have been estimated simultaneously within the panel analysis using the Least Squares and Generalised Method of Moments under the assumption of the presence of cross section heteroskedasticity and the robust standard errors. It has been found that: (1) The order of top fifteen trade partners has changed significantly from the EU countries and the US to the Asian countries after 2003. (2) Exports and imports of the GCC countries are related to the wealth of the partner countries, but not to their distance, mainly due to the nature of their exported and imported goods, the characteristic of the region and developments in transportation facilities.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22130.

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Date of creation: 15 Apr 2010
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Handle: RePEc:pra:mprapa:22130

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Keywords: Gulf Cooperation Council Countries; Trade Flows; Gravity model; Panel Analysis; System Estimation;

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  1. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, Elsevier, vol. 66(1), pages 25-31, January.
  2. repec:ebl:ecbull:v:6:y:2005:i:17:p:1-7 is not listed on IDEAS
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  6. Scott L. Baier & Jeffrey H. Bergstrand, 2004. "Trade agreements and trade flows: Estimating the effect of free trade agreements on trade flows with an application to the European Union," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 214, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  7. Antonucci, Daniele & Manzocchi, Stefano, 2006. "Does Turkey have a special trade relation with the EU?: A gravity model approach," Economic Systems, Elsevier, vol. 30(2), pages 157-169, June.
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