Abstract
Arab intra-regional trade in agro-food accounts for more than half of the total Arab agro-food trade, displaying strong “trade-intensity” over the past decade. This indicates the potential of developing agro-food regional production networks aligning with the region’s comparative advantage in agro-food products. However, intermediates trade, as an indicator of value chain integration, has been low and sluggish due to various structural and policy factors. This article aims to analyze the determinants of trade in agro-food intermediates in the Arab region, focusing on the role and significance of regional trade arrangements and trade facilitation. The Broad Economic Category (BEC) classification is used to categorize goods into intermediate and final goods. Our analysis, using the gravity model, shows that regional trade arrangements in their current form do not significantly affect regional trade (except in the Gulf Cooperation Council [GCC]). We also reveal that timeliness in export delivery is an important determinant of trade in agro-food intermediates. Thus, Arab countries should simplify their customs clearance procedures and engage in a deeper form of regional integration to help build trade corridors and enhance regional value-added chains (RVCs).
Highlights
Trade in intermediate goods—goods used as inputs for further processing—has been steadily growing over the past decades
The increase in trade of intermediates has been driven by the global fragmentation of production and the emergence of global value chains (GVCs), where different production stages are more frequently located in different countries
The population variable effect is more in line with the traditional literature, indicating, for both primary and processed intermediates, that countries that are larger and more populous trade more with each other, thereby supporting the hypothesis that population is a trade facilitator
Summary
Trade in intermediate goods—goods used as inputs for further processing—has been steadily growing over the past decades. Arab region, gravity model, agro-food, regional value-added chains Compared with the manufacturing sectors, less is known about the agricultural pattern of trade in intermediates as well as the policy factors driving the development of value chains in the agro-food sector at the global and regional levels (Greenville et al, 2017).
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