Arab Trade Integration: Evidence from Zero-Inflated Negative Binomial Model

New light is shed on the effectiveness of major Arab Regional Trade Agreements, i.e. GAFTA, AMU, GCC and AGADIR. We use an extended trade data for the years 1997 and 2008 and estimate the gravity equation in its multiplicative form using a Zero-Inflated Negative Binomial model. Results indicate that export and import patterns are comparable. Specific effects to regional integration are disappointing except for GAFTA found to be trade-enhancing to some extent, while GCC, AMU and AGADIR trade gains are not relevant. This can be explained by oil dominance, by persistent barriers and by increasing trade flows towards APEC countries. [PUBLICATION ABSTRACT]