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The Greater Arab Free Trade Area(GAFTA): an Estimation of Its Trade Effects

Author

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  • Péridy, Nicolas

    () (Université du Sud Toulon-Var(LEAD))

  • Abedini, Javad

    () (Université du Nantes)

Abstract

In 1997, fourteen Arab countries concluded an agreement, aimed at achieving the Greater Arab Free Trade Area (GAFTA) by 1.1.2007 at the latest. This paper provides a first ex-post appraisal of the GAFTA agreement’s trade effects. Based on new theoretical developments of the gravity equation, we estimate a panel data model which covers trade within the GAFTA area as well as with 35 other reference countries, over the period 1988-2005. Several estimators are presented, especially transformed fixed-effects, Hausman and Taylor as well as a GMM dynamic estimator. As a main finding, the calculation of gross trade creation shows that regional trade has increased by 20% since GAFTA has been implemented.

Suggested Citation

  • Péridy, Nicolas & Abedini, Javad, 2008. "The Greater Arab Free Trade Area(GAFTA): an Estimation of Its Trade Effects," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 848-872.
  • Handle: RePEc:ris:integr:0456
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    Keywords

    regional economic integration; GAFTA; gravity equation; panel data;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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