Volume 7, Issue 3, 57-65.

Intra-Regional Trade, Evidence from the UAE: A Gravity Model Approach


College of Business Administration, University of Sharjah, Sharjah, UAE. PO Box 27272, University of Sharjah, UAE. Tel: +971 6 5053565, e-mail: souad@sharjah.ac.ae.


This paper presents an empirical analysis of UAE bilateral trade flow with Bahrain and Qatar as group A and Oman and Kuwait as group B over the period of 1991-2009. The standard gravity model of trade in conjunction with a pooled cross sectional (PCS) statistical method is utilized in the analysis.  This study concludes that the coefficients of the GDP variables of the importers and exporters are positive, indicating trade increases less than proportionately with the GDP of the importing country (Groups A & B) and more than proportionately with the GDP of the exporting country (UAE). In addition, the results showed an increase in trade cost as the distance between the two trading partners increase; and countries that share a border trade more with each other than countries that do not share a border.

JEL Classification: C21; F10; F15; G28.

Keywords: Bilateral trade; economic integration; gravity model; GCC; regional integration.


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