An Empirical Assessment of Intra-Regional Trade Relationships: The GCC Context

Abstract

The purpose of this paper is to examine the bilateral trade relationships across three Gulf Cooperation Council countries —the Kingdom of Saudi Arabia, Bahrain, and Qatar—over the last 30 years (1981-2010). The study focuses on the relationships between Bahrain and Qatar, combined as one group, and Kingdom of Saudi Arabia, which has a relatively larger economic mass and population. Data related to bilateral trade was collected from the International Monetary Fund. The proposed model was tested using the path analysis technique. Our results indicated that distance related negatively to the level of Kingdom of Saudi Arabia export level, while the gross domestic product, population growth, and gross domestic product per capita have a positive relationship with the level of Kingdom of Saudi Arabia export level. The four factors included in this research study are crucial to the success of mutual trade flow between both Bahrain and Qatar with the Kingdom of Saudi Arabia because they provide the facts that policy makers need to make the appropriate decisions. The results provide evidence that Kingdom of Saudi Arabia’s exports trade significantly depends on the economic sizes of the other countries and the distance.