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The Greater Arab Free Trade Area (GAFTA): an estimation of its trade effects

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  • Javad Abedini
  • Nicolas Péridy

    (LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon)

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.
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Suggested Citation

  • Javad Abedini & Nicolas Péridy, 2008. "The Greater Arab Free Trade Area (GAFTA): an estimation of its trade effects," Post-Print hal-01298848, HAL.
    • Handle: RePEc:hal:journl:hal-01298848
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    JEL classification:

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

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