Trade volume and economic growth in the Mena Region : goods or services?

Abstract EN

This paper explores the macroeconomic and sectoral effects of trade in goods and trade in services on the economic performance of MENA countries for the period 1960- 2011.

While the MENA region has been widely neglected in the trade and growth literature, this paper offers a decomposition of MENA GDP growth in order to disentangle the contributions of both service trade and goods trade.

The results show a positive association between real GDP and both service and goods trade.

The interaction term between trade in goods and trade in services is negative, suggesting that as goods trade increases, the marginal effect of service trade on real GDP decreases.

However, the overall effect of service trade on real GDP is positive.

The decomposition of GDP growth reveals a greater impact of goods trade, however, service trade is important, and for most countries greater than the effect of tertiary enrollment.

JEL Classifications : F11, F13, F14.