Intra-Arab trade and their economic integration

The dismantle restrictions and the elimination of trade obstacles have become a common feature in regional trade field. Although many countries in several regions in the world have increased their intra-trade, trade among Arab countries has been a relatively small portion of total their trade. The reasons of the weakness of intra-Arab trade are divided into economic reasons such as variance of GDPs of Arab countries, political reason such as political controversies, and natural reason such as geographical location. Using the gravity model fixed effects regression this paper analysis the determinants of intra-Arab trade during the 1985-2005 period. Despite of existence of possibility for intra-Arab trade expanding, the paper argues that this possibility needs -in addition to other factors– harmonize the economic policies and the procedures of trade implementations among Sub-regional Unions of Arab countries in particular or among all Arab countries overall. The real desire is also required to attain the increasing of intra-Arab trade and then obtain the economic development

Why is it so difficult to attract FDI to the MENA countries ?

In this study we constructively argue that the relationship between FDI flows and the per capita GDP for the MENA countries has a novel feature-hitherto unrecognised-which can partially explain the great difficulty of the MENA region in attracting FDI. We show the existence of a separatrix, or trap, in terms of the per capita GDP: To the left of the trap, the change in the flow of FDI as a percentage of GDP declines as the per capita GDP rises. To the right of the trap, the change in the flow of FDI as a percentage of GDP rises with an increase in per capita GDP. Thus, in order to attract FDI, as our results show, the MENA countries must achieve a critical level of economic development in terms of the per capita GDPotherwise FDI flows will be extremely sluggish. From the dataset available for 16 countries during 1996-2013, we find the per capita income trap is at US$10,000. In other words, the FDI to GDP ratio is a non-linear function of the per capita GDP for the MENA region. In fact, we find the function to be inverse S-shaped: For per capita incomes less than$10,000, the function is concave-as per capita GDP rises, FDI as a percentage of GDP rises at a declining rate. Beyond this critical value of per capita GDP (trap/separatrix), the function becomes convex: As per capita GDP rises above the trap, FDI as a percentage of GDP then rises at an increasing rate. 2016 Partha Gangopadhyay and Mohamed Elafif.Scopu

An examination of the extent of and the potential for Arab economic integration

The main objective of this thesis is to examine the extent of and the potential for Arab economic integration. It adds to the growing literature on the issue of economic integration by throwing the spotlight on several issues hitherto little considered in the existing literature. The thesis especially blends various aspects of economic integration with models of spatial competition, economic geography, regionalisation and globalisation to explain the problems of and prospects for economic integration for the Arab countries. It is important to realise that economic integration has become an important aim for almost all countries in the world; in particular, less developed countries, which need more economic efforts to be able to deal with the current international milieu and the gale of globalisation. The Arab countries have engaged in a number of initiatives to advance economic integration, however despite this the degree of economic integration among them is still relatively insignificant. The thesis also attempts to offer theoretical models to explain the obstacles preventing economic integration in the Arab world. This thesis is, to the best of the author’s knowledge and belief, the first rigorous study of the extent of and the potential for Arab economic integration through three vital economic perspectives: trade, investment and labour flows. In the first perspective, this study investigates the nature of intra-Arab trade and which particular countries/sub-group of countries may potentially become an integrated regional production system, or hub. This investigation is done within the scope of gravity models, which assume that intra-trade is a function of the GDPs of the involved countries and the distance between them. The thesis extends the literature by introducing spatial models and models of new economic geography to explain how economic integration evolves in the current international milieu concomitantly driven by globalisation and regionalisation. In the second perspective, this study investigates intra-Arab FDI and capital mobility. The postulated model assumes that intra-Arab FDI is a function of a number of economic variables, such as GDP, GDP per capita, inflation and purchasing power parity. The thesis offers a comprehensive theoretical model to explain how successful economic integration can be carried out by FDI flows. In the third perspective, the study investigates intra-Arab labour flows. The proposed model utilises remittances as an indicator of labour flows. It assumes that remittances are a function of some economic variables, such as GDP per capita, the real price of oil, and the oil production of Saudi Arabia, which represents the main Arab host country of Arab labour flows. The proposed theoretical model offers insights into the dynamics of labour flows and oil price movements. The econometric study in the thesis applies panel data for the period 1985-2005, and employs Ordinary Least Squares (OLS) fixed effects regression. The most important empirical finding of the study is that Arab economic integration has been significantly affected by intra-trade, intra-FDI and intra-labour flows among sub-unions of Arab countries

Intra-Arab trade and their economic integration

The dismantle restrictions and the elimination of trade obstacles have become a common feature in regional trade field. Although many countries in several regions in the world have increased their intra-trade, trade among Arab countries has been a relatively small portion of total their trade. The reasons of the weakness of intra-Arab trade are divided into economic reasons such as variance of GDPs of Arab countries, political reason such as political controversies, and natural reason such as geographical location. Using the gravity model fixed effects regression this paper analysis the determinants of intra-Arab trade during the 1985-2005 period. Despite of existence of possibility for intra-Arab trade expanding, the paper argues that this possibility needs -in addition to other factors– harmonize the economic policies and the procedures of trade implementations among Sub-regional Unions of Arab countries in particular or among all Arab countries overall. The real desire is also required to attain the increasing of intra-Arab trade and then obtain the economic development

The asymmetric effects of oil price on economic growth in Turkey and Saudi Arabia: New evidence from nonlinear ARDL approach

The immediate purpose of this paper is to examine and compare the potential asymmetric oil price effects on real GDP growth in two different countries with differing dependence on oil from the Middle East: Saudi Arabia and Turkey. Saudi Arabia is the major producer of oil in the global market while Turkey is a major user of oil from the region. How do oil price shocks impact on the economic growth of these two major economies from the Middle East? The analysis progresses in three stages: first, we offer a baseline model to explain how oil price shocks can have real effects through their impacts on inflationary expectations and relative price movements. Secondly, a linear ARDL model is tested to explore the long-run dynamics of relative prices and oil price changes. Thirdly, and most importantly, the empirical analysis employs an innovative nonlinear ARDL model proposed by Shin et al. (2014) to estimate the asymmetric long and short run impacts of oil prices. The empirical findings reveal that there is a strong evidence for a stable long run relationship between real GDP, oil price and other explanatory variables. In particular, the asymmetric analysis provides significant results on the difference of the economic growth responses to both positive and negative shocks of oil price. In the case of Saudi Arabia, real GDP response to positive oil shocks is important with larger magnitude compare to the negative shock. On the other hand, real GDP in Turkey react to a positive oil price shock is lower than its react to a negative shock. Our empirical results are extremely important for policy makers regarding the oil production process to achieve sustainable economic growth. Copyright - Mouyad Kassm Alsamara, Mohamed Elafif, Zouhair Mrabet, and Partha Gangopadhyay.Scopu

On the economics of Arab economic integration

The elimination of economic impediments and dismantling of trade restrictions have increasingly become a common feature in the economic integration across nations in the world. Many countries in several regions in the world have increased their intra-flows of goods and also inputs. The Arab region has experienced an increase in their labour flows, in particular during the period of oil boom. Consequently, the remittances among the Arab countries registered a steady increase; especially remittances from the Arab Gulf countries (Gulf cooperation council region). Using the panel data fixed effects estimation, the study investigates the relationship between remittances and economic integration in the Arab region covering the period 1983–2003. Despite the rising tide in intra-Arab labour flows, we argue, the harmonisation of economic policies and the removal of further obstacles to intra-labour flows are necessary to give a further fillip to economic integration in the Arab world. Moreover, our work shows that a reduction of the gap between per capita gross domestic products of the Arab countries is important for enhancing Arab economic integration

The Economic Integration of the Arab world: The Reality and Potential

Over the last century the world economy has encountered deep and rapid changes. Over the years these changes have internationally regionally and locally been transforming our global economic and social systems. These changes are in political and economic spheres. Since the last few years of the previous century a new phenomenon in international economic relations has been on the rise which aims to increase free international trade and eliminate trade barriers and restrictions between countries. In addition, joint efforts are afoot to increase the economic cooperation among nations in all possible ways. Towards this end, since World War II several international organizations have been established, such as the International Monetary Fund, Arab Monetary Fund, Arab League and the Arab Organization of Investment Guarantee. These organizations are involved, directly or indirectly, to promote and grow international trade by a gradual decrease of trade barriers. They have achieved significant improvements in the field of international trade, investment and economic growth

The Impacts of Trade and Financial Developments on Economic Growth in Turkey: ARDL Approach with Structural Break

This study examines the impacts of trade openness, financial development, and energy imports on per capita real GDP in Turkey over the 1960–2014 period. The results show that there is evidence of a stable relationship in the presence of a shift in the cointegration vector in 1980 and 1988. Furthermore, the results indicate that trade openness and financial development have a positive impact on per capita real GDP growth whereas energy imports have a negative impact. Consequently, policy-makers should adopt policies that sustain the benefits of trade and financial developments and improve the use of renewable energy to counterbalance the negative effect of energy imports on economic growth.Scopu

The asymmetric effects of oil price on economic growth in Turkey and Saudi Arabia : new evidence from nonlinear ARDL approach

The immediate purpose of this paper is to examine and compare the potential asymmetric oil price effects on real GDP growth in two different countries with differing dependence on oil from the Middle East: Saudi Arabia and Turkey. Saudi Arabia is the major producer of oil in the global market while Turkey is a major user of oil from the region. How do oil price shocks impact on the economic growth of these two major economies from the Middle East? The analysis progresses in three stages: first, we offer a baseline model to explain how oil price shocks can have real effects through their impacts on inflationary expectations and relative price movements. Secondly, a linear ARDL model is tested to explore the long-run dynamics of relative prices and oil price changes. Thirdly, and most importantly, the empirical analysis employs an innovative nonlinear ARDL model proposed by Shin et al. (2014) to estimate the asymmetric long and short run impacts of oil prices. The empirical findings reveal that there is a strong evidence for a stable long run relationship between real GDP, oil price and other explanatory variables. In particular, the asymmetric analysis provides significant results on the difference of the economic growth responses to both positive and negative shocks of oil price. In the case of Saudi Arabia, real GDP response to positive oil shocks is important with larger magnitude compare to the negative shock. On the other hand, real GDP in Turkey react to a positive oil price shock is lower than its react to a negative shock. Our empirical results are extremely important for policy makers regarding the oil production process to achieve sustainable economic growth