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The Effects of Regional Trade Arrangements on Agri-Food Trade: An Application of the Gravity Modeling Approach to the Arab Gulf Cooperation Council (GCC) Countries

Listed author(s):
  • Boughanmi Houcine

    (Sultan Qaboos University)

  • Al Shidhani Jamal

    (Sultan Qaboos University)

  • Mbaga Msafiri

    (Sultan Qaboos University)

  • Kotagama Hemesiri

    (Sultan Qaboos University)

Registered author(s):

    The objective of this paper is to assess the trade performance of the Gulf Cooperation Council (GCC) countries as a regional trade arrangement and estimate the trade potential of the GCC with countries or groups of countries with which a preferential trade agreement is signed or still in negotiation. The study uses disaggregated data and estimate gravity equations for total exports, total agri-food exports and seven agri-food commodities according to the SITC classification, covering the period 1994-2004. Results indicate that the GCC as a regional trade arrangement has actually promoted trade integration significantly between the member countries in agri-food products as opposed to total aggregate trade. Trade integration is highest in dairy products where GCC intra-trade is 10 times more than what would be predicted by the basic model, followed by meat, fish, and cereal products. The GCC intra-trade did not seem however to change significantly over the years and had probably reached its full potential during the 1993-1996 period. The newly created GCC Custom Union is therefore promising enhancing new opportunities of trade as it goes beyond the removal of tariffs to the elimination of non tariff barriers. Except with the Mashreq countries, trade of GCC with other regional groups and sub-groups is less than expected in all commodities suggesting that there is untapped trade potential which can be enhanced by negotiating a freer trade arrangement between these groups and the GCC region.

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    File URL: https://www.degruyter.com/view/j/rmeef.2010.5.3/rmeef.2010.5.3.1182/rmeef.2010.5.3.1182.xml?format=INT
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    Article provided by De Gruyter in its journal Review of Middle East Economics and Finance.

    Volume (Year): 5 (2010)
    Issue (Month): 3 (February)
    Pages: 46-62

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    Handle: RePEc:bpj:rmeecf:v:5:y:2010:i:3:n:3
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    1. Arvind Subramanian & Natalia T. Tamirisa, 2003. "Is Africa Integrated in the Global Economy?," IMF Staff Papers, Palgrave Macmillan, vol. 50(3), pages 1-2.
    2. Luca De Benedictis & Roberta De Santis & Claudio Vicarelli, 2005. "Hub-and-Spoke or else? Free trade agreements in the 'enlarged' European Union," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 245-260, December.
    3. Boughanmi, Houcine, 2008. "The Trade Potential of the Arab Gulf Cooperation Countries (GCC): A Gravity Model Approach," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 42-56.
    4. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Food and Agricultural Policy Research Institute (FAPRI) Publications 04-wp374, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
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    6. Agostino, Maria Rosaria & Aiello, Francesco & Cardamone, Paola, 2007. "Analyzing the Impact of Trade Preferences in Gravity Models. Does Aggregation Matter?," Working Papers 7294, TRADEAG - Agricultural Trade Agreements.
    7. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
    8. Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Center for Agricultural and Rural Development (CARD) Publications 04-wp374, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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