Abstract:
Using an international dataset on bilateral trade for 137 countries
in 2005, we estimate a gravity model to address the question of whether
intra-Economic Cooperation Organization (ECO) trade is too low and
whether the scale of trade at present is accounted for by regional
integration or unilateral liberalization. The results of the gravity model
confirm that intra-regional trade is lower than predicted by the gravity
equation. The results also validates the theory that the present level of trade
is attributed to regional agreements rather than unilateral liberalization,
suggesting greater scope for regional cooperation among ECO member
countries.
