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Econometric analysis of the bilateral trade flows in the Gulf Cooperation Council countries

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  • INSEL, Aysu
  • TEKCE, Mahmut

Abstract

This study analyzes the trade flows of the Gulf Cooperation Council (GCC) both among its member countries and with the rest of the world for the 1997-2002 and 2003-2007 periods. In this paper, the research question is whether the trade flows of the GCC countries with their partners have sustained and/or they have developed new relations over time, mainly after the 2003 Customs Union agreement of the GCC. For this purpose, fixed effects models have been estimated in order to obtain individual country effects variable. Then, trade model as a function of distance and income variables and the country effects model as a function of the time invariant control variables have been estimated simultaneously within the panel analysis using the Least Squares and Generalised Method of Moments under the assumption of the presence of cross section heteroskedasticity and the robust standard errors. It has been found that: (1) The order of top fifteen trade partners has changed significantly from the EU countries and the US to the Asian countries after 2003. (2) Exports and imports of the GCC countries are related to the wealth of the partner countries, but not to their distance, mainly due to the nature of their exported and imported goods, the characteristic of the region and developments in transportation facilities.

Suggested Citation

  • INSEL, Aysu & TEKCE, Mahmut, 2010. "Econometric analysis of the bilateral trade flows in the Gulf Cooperation Council countries," MPRA Paper 22130, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22130
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    References listed on IDEAS

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    1. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72.
    2. Scott L. Baier & Jeffrey H. Bergstrand, 2004. "Trade agreements and trade flows: Estimating the effect of free trade agreements on trade flows with an application to the European Union," European Economy - Economic Papers 2008 - 2015 214, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    4. Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso, 2005. "Does Heterogeneity Matter In The Context Of The Gravity Model?," Economics Bulletin, AccessEcon, vol. 6(17), pages 1-7.
    5. Antonucci, Daniele & Manzocchi, Stefano, 2006. "Does Turkey have a special trade relation with the EU?: A gravity model approach," Economic Systems, Elsevier, vol. 30(2), pages 157-169, June.
    6. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
    7. De Benedictis Luca & Vicarelli Claudio, 2005. "Trade Potentials in Gravity Panel Data Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-33, September.
    8. Peter Egger & Michael Pfaffermayr, 2002. "Long Run and Short Effects in Static Panel Models," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B6-2, International Conferences on Panel Data.
    9. repec:ebl:ecbull:v:6:y:2005:i:17:p:1-7 is not listed on IDEAS
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    More about this item

    Keywords

    Gulf Cooperation Council Countries; Trade Flows; Gravity model; Panel Analysis; System Estimation;

    JEL classification:

    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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