The determinants of gcc intra-industry trade in agricultural products

Abstract EN

Similar economic structures and high per capita income levels in GCC countries are expected to promote economic integration in the region.

However, despite the implementation of a unified economic agreement to promote free trade among member countries in 1981, the process of economic integration remains weak as reflected by intra-regional trade ratios.

The objective of this paper is to assess the extent of GCC intra-regional trade and estimate the determinants of intra-industry trade in agricultural and food products.

Results indicate that the Intra-lndustry Trade (IIT) index is particularly high for the United Arab Emirates and Saudi Arabia indicating a potential for competition based on product differentiation and economies of scale for these two countries.

Other countries like Oman and Qatar mostly trade in raw agricultural commodities with little scope for product differentiation.

The econometric analysis shows that IIT is positively correlated with the frontier variable and the GDP of the country of destination but negatively correlated with relative income inequality