Determinants of Trade in the Middle East and North Africa

This research explores the determinants of bilateral trade flow between the Middle East and North African countries using a panel data analysis from 1990 to 2019. The structural gravity model is estimated using ordinary least square (OLS) and Poisson Pseudo Likelihood (PPML) techniques. We included six independent variables: the GDP, distance between country capitals, common language, contiguity, common colony, and a regional trade agreement (RTA) dummy. The data is retrieved from the Center for Prospective Studies and International Information (CEPII). OLS estimates suggest that the GDP of both origin and destination countries, distance, contiguity, and RTA significantly affect trade flows. Similarly, PPML estimation results indicate that bilateral trade flows between MENA are affected by GDP, distance, common language, common colony, and RTA.