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Trade Potential in Arab Nations: The Case of the GCC and PAFTA

Author

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  • Dadakas Dimitrios

    (Department of Economics, University of Ioannina, Panepistimioupoli, 45110, Ioannina, Greece)

Abstract

We examine trade flows for Arab nations concentrating on the Gulf Cooperation Council (GCC) and Pan-Arab Free Trade Area (PAFTA) areas, to identify opportunities to enhance intra-Arab trade and facilitate regional integration. We employ panel data for the years 2003–2017 and a structural gravity model together with an “aggregate” trade potential measure that treats the GCC and PAFTA areas as single countries. Results suggest that, by 2015, intra-area trade had reached maximum capacity for both blocs. Potential to trade also reached capacity with many of the largest Free Trade Areas around the world, however, opportunities for trade expansion that still exist with the MERCOSUR and ASEAN, as well as many distinct destinations, can assist in strategic planning to enhance integration efforts.

Suggested Citation

  • Dadakas Dimitrios, 2021. "Trade Potential in Arab Nations: The Case of the GCC and PAFTA," Review of Middle East Economics and Finance, De Gruyter, vol. 17(3), pages 139-174, December.
    • Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:3:p:139-174:n:4
    DOI: 10.1515/rmeef-2020-0038
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    More about this item

    Keywords

    GCC; PAFTA; free trade agreements; trade potential; structural gravity; F1; C33;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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