ABSTRACT
This chapter provides the composition of trade within an Arab integration and investigates whether intra-regional trade spurs higher output growth compared to extra-regional trade. During the late 1980s and early 1990s, many developing countries entered into new regional agreements, strengthened old ones, or investigated the potential for one. The existing literature provides mixed evidence regarding the contribution of integration on economic growth. The empirical literature on openness and growth is voluminous indeed. Broadly speaking, however, a number of findings appear to emerge from this literature. In addition, lagging trade variables when estimate their effect on output ensures that observations on trade precede growth effects. Thus, if a significant relationship exists, then the case for linear prediction is strengthened. Separating out the effect of intra-regional and extra-regional trade is very difficult and perhaps not possible practically in Arab countries, but under the current conditions of research, it is considered a hypothesis.
