Assessing Intra-Arab Trade Integration and Potential: Evidence from the Stochastic Frontier Gravity Model

Abstract

This study aims to detect the presence of “behind the border” and “beyond the border” constraints on trade flows among Arab countries, using the stochastic frontier gravity model (SFGM) over the period of 1998 to 2015. The empirical results indicate that “behind the border” constraints are responsible for a considerable gap between potential and actual trade among Arab countries. The results also reveal that the influence of “behind the border” constraints on trade flows between Arab countries has been decreasing over time. Moreover, the efficiency scores of intra-Arab trade indicate a relatively low degree of trade integration among Arab countries.