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Constraints on Trade in the MENA region

Author

Listed:
  • Hirut Wolde
  • Rina Bhattacharya

Abstract

In this paper we estimate gravity models to see whether trade volumes of countries in the MENA region are significantly lower than what would be expected given their economic, cultural and geographical characteristics. Our empirical results show that the variables used in standard gravity models cannot explain a significant part of MENA's trade performance, particularly on exports. We then go on to 'augment' the standard gravity model with relevant variables from the World Bank's Business Enterprise surveys. Our results further show that these variables, and in particular transport constraints and inefficiencies in customs clearance processes, are important in explaining the MENA region's underperformance in trade.

Suggested Citation

  • Hirut Wolde & Rina Bhattacharya, 2010. "Constraints on Trade in the MENA region," IMF Working Papers 10/31, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/31
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    References listed on IDEAS

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    1. Coe, David T & Hoffmaister, Alexander W, 1999. "North-South Trade: Is Africa Unusual?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 228-256, July.
    2. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
    3. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    4. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
    5. Stanley Fischer & Mohamed A. El-Erian, 1996. "Is MENA a Region? The Scope for Regional Integration," IMF Working Papers 96/30, International Monetary Fund.
    6. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters,in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
    7. Norbert Wilson, 2007. "Examining the Trade Effect of Certain Customs and Administrative Procedures," OECD Trade Policy Papers 42, OECD Publishing.
    8. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
    9. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics,in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365 Elsevier.
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    Cited by:

    1. Jean-Pierre Chauffour & Bernard M., 2013. "Harnessing Trade Opportunities in the Middle East and North Africa," RSCAS Working Papers PP2013/07, European University Institute.
    2. Sekkat, Khalid, 2012. "Manufactured Exports and FDI in Southern Mediterranean Countries: Evolution, determinants and prospects," CEPS Papers 6849, Centre for European Policy Studies.

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