Trade performance and potential of North African countries: An application of a stochastic frontier gravity model

Lota Tamini, Houssem Eddine Chebbi and Abdessalem Abbassi

No 33, AGRODEP working papers from International Food Policy Research Institute (IFPRI)

Abstract: The objective of this paper is to analyze trade potential versus actual realized trade among North African trading partners. Following the literature on production economics, we built a stochastic frontier gravity model. The underlying assumption is that all deviations from trade potential is not due to white noise but may also be due to inefficiencies. Time-variant country-specific trade efficiency estimates are obtained and analyzed. Our results indicate that Mauritania, as a country both of destination and of origin, is where the region’s trading relationship is the least efficient. Tunisia, followed by Morocco, faces the fewest behind- and beyond-the-border effects. Our analysis of market integration and trade efficiency at the disaggregated level indicates that trade efficiency scores exhibit high variability between categories of products. Moreover, North African market integration is worst when considering the goods from “Textiles; Footwear & Headgear†category. Our estimates indicate that trade efficiency for agricultural products is relatively low, indicating the existence of significant behind- and beyond-the-border inefficiencies. Our estimates also underline the importance of improving domestic policies to encourage entrepreneurial development and business facilities.

Keywords: models; trade policies; trade; stochastic models (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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https://hdl.handle.net/10568/148527

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Working Paper: Trade performance and potential of North African countries: An application of a stochastic frontier gravity model (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fpr:agrowp:33

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