Linear Brake
Globalization and Feasibility Study of regionalism in the Middle East and North Africa
Introduction
new regionalism is the point of consensus between the development strategies of economic doctrines in conflict. The dominant neo-liberal paradigm, regionalism is assumed as a key step in the transformation of the system international economic globalization. The alternative paradigm also sees regionalism as a starting point for developing countries to relieve pressures hegemony of capitalism and increase their bargaining power and an opportunity for the formation and evolution of an alternative economic system. Meanwhile, the organization of the Islamic Conference (OIC) has also seen regionalism as an appropriate strategy for economic development, proposing the formation of a common market Islamic.
In line with this strategy, this document deals with the feasibility study of regionalism in the MENA region, the region where the Abrahamic religions and the glorious Islamic civilization, the top-and a civilization unparalleled in the Middle Ages, were born and raised. However, the industrial revolution and the environment subsequent revival led by the rise of Western science and promoting the one hand, and the incompetence of the Muslim rulers down the time on the other hand, creates a deep gap between the region and Europe - and later in the U.S.. The geostrategic importance of the region and the need for revival and reconstruction of civilization Islam is the main reason behind the selection of members from regions such as the statistical population.
In this paper, the theory Linder is the fundamental part of the feasibility study of creating a regional free trade - and an Islamic Common Market, in the later stages, as the globalization process progresses. In contrast to classical theories of trade (for example, the Heckscher-Ohlin theory), the Linder theory focuses on the demand side and explains the trade patterns based on similarities in demand structures. As the similarities of the structures of demand depends largely convergence of income per capita, the following two hypotheses are tested simultaneously:
Globalization brings with it the convergence of trends in income per capita in the MENA region, while the North-South per capita income show divergent trends. Theoretically, this hypothesis is indebted to (1996) Symmetric breaking Matsuyama and Deardroff of (1998) theories of several cones and, in general, suggests the presence of global hemispheric divergence and convergence. The hypothesis test is performed using double-difference method.
The Linder theory adequately explains the behavior MENA countries' trade with Muslim countries and the rest of the world. Ie divergence and global convergence hemisphere, the intra-regional trade in MENA will increase inter-regional and will be reduced.
Therefore, the feasibility study of regionalization and the formation of a common market will be in three steps:
i. The impact of globalization on the convergence or divergence income per capita among MENA countries;
ii. The impact of globalization on the convergence or divergence of per capita income between countries North and South, and
iii. An empirical test of the Linder hypothesis to examine the trade patterns of countries in the region before and after liberalization trade.
Along with Slaughter (2001) studies, which support the divergent trends in income per capita due to globalization throughout the world, this work argues that globalization opens the way for regionalization and the formation of an Islamic Common Market in the MENA region.
The following table shows the results of all possible scenarios for the two previous tests hypotheses. The first column corresponds to the first hypothesis, the second for studies of Slaughter, the third and fourth the results of the second hypothesis test.
If the global divergence and regional convergence is confirmed and the theory could explain the behavior Linder the region's trade with the Muslim world and elsewhere, we can expect that globalization will make the establishment of a common market more feasible. The third (Second) scenario illustrates better (worse) situation in the subject under discussion.
Nahanvdian AS and Elahi (2005) have confirmed the convergence of trends in income per capita in the region, using the DID method and Slaughter (2001) has verified the North-South gap by the same method, there is no need to test the first hypothesis. This means that the first two stages of divergence, convergence global and hemispheric-feasibility study of regionalization and the establishment of a market Islamic Common have been met. However, to realize the feasibility project we just have to test the second hypothesis.
The document consists of two parts: fist part Linder explains the theory and evidence in the second part of the relevance of this theory in the business conduct of the Middle East and North Africa. In conclusion, considering Slaughter (2001) and Elahi Nahavandian (2005) studies on the one hand and the results of the tests of Linder's theory however, the feasibility of regionalization in the countries under study examines
Table 1 - the possible scenarios
Per capita income Scenario Test Results Linder hypothesis
North MENA South and Muslim countries worldwide intraregional trade Interregional Trade Feasibility Study
A convergent convergent Increase Verification Verification Increase No Preference
2 Verification Verification convergent divergent Impossibility Increase Decrease
Three convergent divergent Increase Verification Verification Chance dramatic decrease
4 Reduce Verification Verification divergent divergent Decrease No Preference
5-6 converging / diverging Verification Judgement rejection convergent n Increase -
7-8 converging / diverging diverging Verification no decrease rejection of Judgement -
9 to 10 Convergent convergent / Diverging rejection Verification Increase No Judgement likely possibility
11-12 Divergent Convergent / divergent Decreased Rejection Verification Judgement n -
13-16 converging / diverging converging / diverging Pushback Pushback no Judgement No Judgement -
I. Linder S Theory
1-1. Background
Before 1960, theories were based on supply and trade Heckscher-Ohlin as the most popular theory emphasized the factor endowments as the determinant model of trade and comparative advantage. According to this theory the labor abundant country should specialize in the production and export of labor intensive goods force. They must import the required capital-intensive products from countries with higher per capita income.
The theory is based on a number of assumptions including the similarity in patterns of consumption and technology, the existence of constant returns to scale and competitive conditions and the irreversibility of factor intensity in the countries involved. Besides offering a reasonable explanation of comparative advantage, on the basis of factor endowments - this theory says that the price of factors established absolute equality in the contribution of Samuelson. Leontief tests (1954 and 1956) on exports and imports showed that U.S. imports U.S. was surprisingly capital intensive goods, while U.S. capita per capita than any other country. Baldwin (1971) also argues that This paradox remains. He found that U.S. imports are 27% more capital intensive.
Studies Tatemoto and Ichimura (1959) showed that this paradox exists in Japan too, though in another form. Japan is labor intensive compared to advanced countries, but capital abundant country relationship with other nations. However, exports from Japan were found to capital-intensive products and imports were goods intensive in labor. Whaling (1961) also studied the Canadian trade pattern and noted that while U.S. trade with accounted for the bulk of the commercial relationship between Canada and U.S. capital export was a Canadian nation was relatively abundant capital intensive. Bharawaj (1962) also found the irrelevance of the HO theory in trade relations India and the United States
In general, it can be argued that the Leontief paradox was a turning point in the development of new theories exchanges. Leontief and others tried to present explanations for the inconsistency of the theory of the Heckscher Ohlin trade patterns of the countries under study, to increase the gap in U.S. labor productivity, the intensity factor of the investment, the demand biasness, the abundance of natural resources in the U.S., costs transportation and tariffs, and the Heckscher-Ohlin neglect of human capital. However, Daniel Trefler (1993) stressed that in view of the excessive dispersion factor prices in different countries is naive to speak of equal price factor. Moreover, the existence of North-North trade shows that HO is unable to explain the behavior of trade and the results of empirical studies have repeatedly confirmed the inconsistency of the HO theory with these results.
In search of a solution to the lack of relevance HO theory with empirical studies, there have been several efforts to reform and reformulate the theory so that the central idea in theory saved. Therefore, different versions as HOV and HOC versions of this theory have been made to save the essence of the theory, even if the result is the violation of some assumptions. However, achievement appears to be negligible.
1-2. Linder theory and its elements
Linder has examined the market behavior came to a quiet different. Their approach is usually identified with the demand. With this approach, seems to have managed to develop a coherence theory of truth grater with test statistics obtained by Leontief and similar tests. However, as Leamer and Levinsohn (1995, 1383) have written ", while Linder had no formal model, there was a compelling story. According Fillat Castejon and Serrano-Sanz, this approach has caused his theory to enjoy a high degree of success. In his view, the theory of Linder has done better in explaining trade performance "Linder considers the possible trade is explained by the so-called" trade-creating forces, "while some brakes" actual trade will be diverted away from its potential, with the pattern of trade and trading partners of each country is determined by the ratio of trade and the creation of the braking forces. "
Linder (1961) challenged some beliefs about international trade theory at the time, in particular Theorem HO. According to HO, the relative endowment of productive factors in the theory is always an explanation for the model, emphasizing differentiated products terms of factor intensities and countries in terms of factor endowments. Therefore, trade in capital-intensive goods with labor-intensive goods work among rich countries with abundant capital and labor must be established. While trade is largely established with similar products and among countries with comparable levels of development enjoy a high growth rate. In fact, the theory of Linder tried to give an answer to these two aspects, development of trade and trading partners.
Another novelty in Linder's theory is its emphasis on the dynamic aspects of the relationship between trade and development. The growth experienced by a country modifies its structure of demand and, therefore, both the range of actual and potential exports, explaining how the pattern of changes in trade over time. Within this area of trade potential, the current trade is determined from a combination of factors that tend to strengthen, trade in the so-called creation of forces, and others that tend to limit the trade of so-called braking forces. All these constitute an underlying theoretical basis for prediction commercial conduct. The greatest demand in the country call expanding exports of thesis-while lower demand will be imported. This approach involves a form of priori reasoning that illustrates the intra-industry trade and the Linder approach. Gray (1988) considers Linder approach as a key element in intra-industry trade paradigm. "
1-2-1. The Trade-Creating Forces
As noted and unlike the theories of supply of trade, Linder turned his attention to the demand when trying to explain trade. According to their thinking, the demand characteristics of two countries that act as crucial factors in explaining trade potential, and is the basic idea Linder has developed an important part of the later literature. In this theory, monopolistic competition is considered as a possible factor in the growth of intra-industry trade.
The relationship between demand and international trade can be established in two ways, ie through complementarity of demand structures of two countries and over how representative the demand for common products. In the first form places the emphasis on trade for the satisfaction of needs. The second approach emphasizes the demand feature.
In both approaches, substantial output is produced for meeting the domestic needs of a country and - in view of the possibilities of production - the surplus to domestic requirements are exported to countries with structures similar demand.
Linder rightly argues that the determinants of the demand structure are modes or average revenue per capita income and average per capita is not a determinant of good structure of demand - especially for countries with a dispersion of income. However, it is too difficult to get the distribution of income per capita of different countries, therefore, average income is used to determine the structure of demand (Linder, 1961:94). To justify the role of income per capita in the demand structure of a country, Linder is based on the concept of income elasticity of demand (Linder, 1961: 94).
As follows from Engel's law, increasing per capita income, higher quality and luxury products are considered as the need and the fall in the basket standing need for inferior goods resulting in an increase in demand for luxury goods. With regard to how representative the application, when a country is greater production potential, the probability of exporting will be higher than otherwise, these demands will be met with imports.
An original point in this analysis is that the trading countries enjoy a level similar structure of demand and therefore similar per capita income distribution.
Roughly speaking, one can say that the closer the per capita income average greater the possibility of occurrence of trade. Theoretical developments in demand analysis using models inspired by Linder have focused on three issues. (Fillat Castejon and Serrano-Sanz, 2004: 326-7) the association between income level and demand for quality, based on consumer preferences expressed in terms of the characteristics of the goods and not only in terms of quantity. This approach allows us to explain why economic growth leads to a differentiation horizontal superior products and an increase in the average quality or complexity is required. There are non-homothetic preferences and growth of income affects the demand for different products in different ways, resulting in structural changes. Markusen (1986) Linder test observation that people with similar per capita incomes consume similar sets product. Non-homothetic preferences, which in the analysis of Markusen have taken the form of a course, are formalized and empirically Hunter and Markusen (1988). In accordance with this logic, the change in demand structure will have implications on the composition of trade, that the greater the non-homothetic nature of demand, the stronger the trade between two countries with similar per capita income. The distribution of income and preferences within countries is an essential point to consider the possible overlapping claims and the identification of varieties or characteristics of a good that is traded. The usual models of the negligence of International Trade the details, but Linder ideas allow us to be more accurate. Therefore, in countries with income distribution, even with a similar level of income per capita, hope that the combination of demand increases.
However, revenues, even with a per capita and an uneven distribution around an average, a number of qualities required for each product type and a form of vertical differentiation, arise. When income is concentrated at higher level the best quality products traded otherwise lower the quality of the product will have greater importance. Thereafter, the dispersion of income distribution will have an influence on trade in a global way, and through the range of varieties that are susceptible to trade. However, as mentioned earlier access to the dispersion of earnings countries and their incorporation into the model is beyond the scope and space of this article.
According to Linder (1961: 110), small countries establish greater trade size with larger rather than smaller countries. Therefore, product differentiation is another element of creation trade, although this aspect has been developed almost in his work. However, the volume of trade is positively associated with the size of the economy and the market. Subsequently, has received considerable attention, particularly in relation to the size of the market. On the other hand, this is the reason for expanding trade between small sized countries large companies compared to small-small countries. Other studies carried out on the basis of the theory s Linder, suggest that the size also conditions the possibilities for diversification and is manifested in the volume and specialization, that is, not only quantitative but also influence qualitative.
For example, Keesing (1968) showed that the larger size of a country led to increased exports and decreased imports, while that both depended positively on income. Balassa Balassa, B. and Bauwens, L. (1988) confirmed the need for large domestic markets for manufactured exports, due to economies of scale, therefore, the large countries are at an advantage. Fillat Castejon, and Serrano-Sanz (2004) for higher income elasticity industrial products, exports of large countries at any level of income per capita will be systematically biased toward the industry compared with the average for small countries. Perkins and Syrquin (1989) noted that exports of these large countries that specialize in manufacturing, while exports of small countries are specialized in minerals.
These studies, together with an assessment of the possible influence of size on specialization leads us to propose the hypothesis that, for each level of income per capita, country size makes reference to export and import standardized goods of differentiated goods from its trading partners of small size, and exports of differentiated goods and imports of goods standardized trading partners large. Therefore, as the size of growing trading partner, exports and imports are stimulated inhibited in differentiated product sectors of the province reference, while the opposite occurs with standardized products. Therefore, the greater the difference in the size of the economy the greater the potential for trade. In particular, the product differentiation is not relevant.
1-2-2. Trade-braking forces
Brakes on trade considering the factors causing trade trading away real potential. The three factors explicitly recognized by Linder are the use of scarce factors in the real defendant, the distance barriers to trade and man. The use of scarce factors is the main point of connection to the Heckscher-Ohlin theorem, Linder argued that the intensive use of a scarce factor in a variety including in the superposition of the complaint is that the efficiency to decrease and deviate trade and imposes deadweight loss. This loss is due to the factor involving inner side of production rather than economic factors of foreign production. Therefore, the main source of difference between Linder and theory is the emphasis HO the latter in the allocation of production. In other words, this theory is developed with a focus on supply side while in demand approach Linder demand for overlapping shapes the pattern of trade. However, the use of low utilization of a scarce factor in a variety included in the overlapping Demand is recognized as an occupation force of rupture, ie that what is seen as an opportunity in his absence HO theory is considered an obstacle to trade theory Linder. As far as distance is concerned, the companies can not expand their business horizons without costs, since they face transportation and organization costs due to the decrease in rate of return. Tariffs and other barriers imposed by the people are also considered as the third force braking to trade.
The subsequent evolution of the work of Linder also have emphasized the role played by information flows. Vahlne and Wiedersheim-Paul (1977) have tried to reflect this with the concept of "psychological distance", which takes the form of differences in the level of development. The different levels of education technique is considered another profession to break the force. The final brake on trade potential of a country could take the form of economic isolation, the result of a divergence of growth trajectory of its neighbors. A country that is isolated for this reason we have limited trading horizons. Hufbauer (1970) was the first to declare the divergence in growth trajectory between trade-braking forces.
2. Empirical evidence
Several empirical studies suggest Linder's theory provides a good explanation of the trading behavior of countries and that countries with an experience similar demand structure more trade. In the early years of the introduction of the theory of Linder Hufbauer (1970), Fortune (1979), Mariners et al (1973), Hirsch (1973), and Kohlhagen (1977) provide reliable evidence that supports the model. However, when the role of geographical indications distance was recognized as a determinant of patterns of trad; Hoftyzer (1975), Greytak and McHugh (1977), Kennedy and McHugh (1983), Qureshi et al (1980), showed that of Linder's theory needs serious reform. In recent years a series of studies, different approaches have attempted to test the theory of lender. Some studies have followed the model of gravity. Bergstrand (1989, 1990), played an important role in the theory of Linder and gravity model and studies of Thursby and Thursby (1987), Hanink (1988), Greytak. and Tuchinda (1990), McPherson et al. in theory Linder is remarkable. Schott (2004), Hummels and Klenow (2002), Hallak (2003), and Fillat Castejon and Serrano Sanz (2004) carefully test the structure and concept of similarity demand patterns and found that more appropriately could explain the country's trade performance.
2-1. Research Methodology
Given that in this study the commercial behavior of Muslim countries in the MENA region with other non-Muslim countries before and after economic reforms under consideration, the panel data econometric techniques used in the context of the difference in differences (DID) method. With the technique DID, we can classify the results into two periods of pre-and post-reform. Criminal data econometric technique has several advantages compared with section cross-sectional or time series data. Some of these advantages we are in:
i. Allows access more data, using both cross section and time series data;
ii. Unlike the method using data from a single dimension, Criminal data allows the researcher to test hypotheses of behavior dynamic and with a higher level of security;
iii. Criminal data provides a better tool for analyzing the nature of the shocks, unobserved and conditions latent (Nerlove, 2002: 3-4)
As data sets of panel data are greater than the time series and cross sectional data sets and other explanatory variables often vary, both over time and from one individual to another, panel data estimators are more efficient than other estimators (Verbeek, 2004: 343)
The general form used data models Criminal has the following expression:
(1)
YIT where variable i depends on time t, Xit is a vector k-dimensional independent variable and? are assumed to be related to individuals and time? represents the fixed effects? i mean cross and effects? T represents time special effects.
In the Panel data, the coefficients are estimated in two different ways: fixed effects model and random effects model. In the fixed effects model of the intersection line regression vary from individual to individual. While at the second intersection model are the same but there is a random error for all individuals of this model? i +? acts as the error term, which consists of two parts: the individual specific and common part. It is assumed that? I? ? It is independent of each other and Xit. Although this suggests that the OLS estimators are still unbiased and consistent, but due to the composite structure of the error terms? I +? That these estimates will not be very effective if? 2? = 0. By contrast, the GLS estimators are more efficient, despite being consistent and fair. Therefore, in the fixed effects models using GLS estimators See: (Verbeek, 2004: 345-51).
2-1-1. The specification of an optimal model
A very important decision in the use of technical data is Criminal selection of an optimal model. The proper interpretation is that the fixed effects approach is conditional on values? I. That is, believes that essentially the YIT distribution given? I, where? I s can be estimated. This makes intuitive sense if individuals in the sample are "one of the species', and can not be seen as a draw from some underlying population. This interpretation is probably the most appropriate where i denotes countries, (large) companies or industries, and predictions we make are for a specific country, company or industry. Inferences are therefore with respect to the effects found in the sample.
In contrast, random effects approach is not conditional on the person? It is, but "integrated out." In this case, we usually are not interested in the value particular individuals? I, only we focus on people who have certain characteristics arbitrary. The random effects approach allows inferences about the characteristics of the population. One way to formalize this is to point out that the random effects model provides
(2)
While effects model estimated fixed
(3)
The estimated coefficients are equal only when the wineries. Therefore, taking into account the period of time if a small number of individuals and the identification of each individual has a particular meaning that the fixed effects model using a random effects model can also otherwise be an appropriate strategy. However, even under random effects are appropriate due to the relative frequency of the fixed effects may be more appropriate, as there may be a correlation? i? Xit but this correlation is neglected in the random effects and this can lead to inconsistency of the estimators. . (Verbeek, 2004: 351-2)
The best way to specify the optimal model is the Hausman test. The null hypothesis in this test states that there is no correlation between? i Xit. Therefore the fixed effects (GLS estimates of () is not efficient but is consistent. The alternative hypothesis (H1) the correlation between? I and Xit is accepted. As a result estimates of fixed effects () Is consistent and efficient, but random effects estimator () is not consistent.
Thus under the null hypothesis there is no systematic difference between the two estimators. Therefore, you can rearrange the hypothesis as
(4)
(5)
Hausman test statistics (HT) is as follows:
(6)
This statistic has asymptotically the distribution with one degree of freedom, where K are the elements of vector? ie
(7)
(See: Baltagi (2001) Green (2003) and Verbeek (2004)
2-1-2. Modeling
Develop an empirical model to test the theory in an emphasis DID Linder criteria are placed in two variables Explanatory:
i. the difference in per capita income of a particular country and per capita income of the region under study (and wider Muslim world). This variable, which we shall call Linder variable is obtained from the square of the deviation of per capita income of the reference country average per capita income Lin region = (PCGi-PCGj) 2. PCG refers to per capita income and the subscript i stands for country i in the MENA region and the subscript j shows Muslim countries and elsewhere.
ii. The size of the economy of a country as a proportion of the entire region GDPT. This variable is calculated as:
(8)
In this model, the volume of trade of the country in the region under study is XTij is the dependent variable. (All figures in constant U.S. $ 1996).
Moreover, the model of the DID method, the dichotomous variables to use. To examine the effects of globalization on both the slope and the intercept the three variables dichotomous then add:
i. G as a proxy for globalization, a dichotomous variable for which they are assigned two values: zero for the period prior to 1991 and 1 for periods after 1991. This variable gives the intercept;
ii. Product G ¬ Linij giving G_Lin ij;
iii. Product of G multiplied by GDPT giving G_GDPT ¬ ¬ ij ¬ ij.
Thus, the empirical (Criminal data) model classified by the country's trade relationship with the regions concerned (World Muslim and the rest of the word) can be written as:
(9)
For years after 1991 that most countries in the region have ongoing economic reforms, G = 1 and for years prior to that G = 0. Therefore, for the years before 1991 we will have
(10)
and for years after 1991 we will have
(11)
Now, if the Hausman test rejects the hypothesis of first fixed-effects model should be employed as a result? J = 0, otherwise as random effects model? j will have a constant value in the trade relations of the country.
According to Linder's theory is expected that? 20.
2-1-3. The Data and sample
As mentioned, this work is mainly aimed at examining the effects of globalization on the commercial relationship between the MENA region. As a result statistical problems, some countries had to be removed from the sample. Other countries are Jordan, Algeria, UAE, Iran, Bahrain and Tunisia, Iraq, Saudi Arabia, Oman, Qatar, Kuwait, Lebanon, Libya, Morocco, Egypt and Yemen.
partners of these countries trade in the world are classified Muslim (all members of the OIC) and the rest of the world. Penn table SESRTCIC and website were the sources of the raw data, which were used in this investigation after of certain processes and calculations required indexes and ratios were performed. From 1975 - 2002 was chosen as the study period. To test the stationary test different unit root variables used. Since our null hypothesis is, was the non-stationarity
H0: |? | = 1 (12)
H1: |? | The result (Table 2 and 3) shows that the null hypothesis is rejected. Therefore, the stationary of the variables and their convergence over time are confirmed.
2-1-4. Tests scenario process
After the introduction of various Penal data models and analysis of the level of significance (t-statistics) and regression (statistics-f) significant variables were identified. Hausman test shows that the null hypothesis can not be rejected in both tests (trade relationship with Muslim countries and the rest). This means that the estimator is GLS random effects () is consistent, impartial and efficient. See Table 6 and 7.The results of the regressions tested are shown in Table 4 and 5.
2-2. Interpretations of results
Given a dichotomous variable coefficient (G) is filtered through the emphasis omitted from the model. According to the results in Table 4, the business conduct of the countries studied with the Muslim world is explained as follows:
(14)
(3.47) - (33.99) (-7.01) (5.113) (2.20)
Subscript i in this equation and the equation 15 and 16 refers to the Islamic countries (IC).
As we look at all the coefficients with a high level of importance. trade based on these results the behavior of these countries prior to economic reforms (1991) can be expressed by
(15)
The Linder negative coefficient suggests that a decline in per capita income gap between the region MENA and Muslim world for the period before globalization promotes commercial relations. On the other hand, a positive sign of the variable size of the economy showing faster growth of the countries in the region compared to the whole Muslim world will lead to increased exports of these countries. Ie the greater the economic diversity of the largest economic relations. All these theories are fully consistent with the theory of Linder.
For driving the equation of regional trade performance with the Muslim world and the period after the economic reforms that we need to get? 1 +? 3? 2 +? Regression 4 or 9
(16)
According to the coefficients obtained it becomes evident that, on the one hand, globalization intensifies the effects of size of the economy, but on the other, reduces the effects of the similarity of the patterns of demand on trade trends. However, as per capita income gap between Muslim countries reduces the extension of trade relations can be expected.
Consequently, we can argue that even globalization has not eliminated the relevance of the theory of Linder. Moreover, in view of the results and Nahavandian Elahi (2005) and Slaughter (2001) Studies on the effects of globalization on the regional income convergence and divergence in worldwide revenue in the process of globalization, the potential of regionalism will be strengthened paving the way for the establishment of the FTA and - the later stage of the Common Market-Islamic.
Moreover, to explain the behavior MENA region's trade with other countries two dichotomous variables (G and G_GDPTit) were omitted from regression No. 9, as they lacked the proper importance.
As seen in the Table 5 of the countries' trading behavior the region with the rest of the world can be written as:
(17)
(2.78) - (-3.76) (2.90) (3.08)
The coefficients of this regression equation also enjoy a high level of importance. Given the dichotomous variable G_Lin we can drive the following equations for the two periods pre and post reforms economic
(18)
(19)
These two equations show explicitly that the theory can explain the behavior Linder countries' trade MENA with the rest of the world. Given Slaughter (2001) studies supports the divergence in the globalization process, we can conclude that as the income gap increases the volume of trade in MENA countries fall. The decline in regional trade relations with the rest of the world and the expansion of trade volume the Islamic world sets the stage for the formation of a Free Trade Area.
Conclusions:
In view of the new wave of regionalism and the establishment of a common market recently raised by the OIC, in this work focused on the feasibility of regionalism in the Middle East and North Africa in the era of globalization. The use of a new and novel method was demonstrated that globalization not only acts as an obstacle to the creation of a free trade agreement in the region MENA also prepares the ground for the realization of this objective. The rationale for the feasibility study could be summarized as under:
i. According to Slaughter (2001) examines the trends capita for developed and developing countries are divergent;
ii. According Elahi and Nahavandian (2005), there is a trend of convergence in the income per capita in MENA countries;
iii. Linder's theory - tested in this study-the more convergence (divergence) in income per capita above (Lower) the volume of trade.
Thus, convergence in income per capita region and confirmation of the theory of Linder is expected to trade within regional Islamic countries will rise and fall non-Muslim countries.
Note that for the conditions for successful regionalism number must be satisfied, the most important condition would be the economic complementarity of the member countries. However, this issue was beyond the scope of this work has focused on examining the impacts of globalization on the volume of trade between MENA countries and the Islamic world and the rest of world
Table 2 - Unit root test (variables defined 1)
Pool unit root test: Summary
Date: 01/28/05 Time: 13:27
Sample: 1980 2003
Series: XTIC_BHR XTIC_ALG,, XTIC_EGY, XTIC_IRN, XTIC_IRQ,
XTIC_JOR, XTIC_KWT, XTIC_LBN, XTIC_LBY, XTIC_MAR,
XTIC_OMN, XTIC_QAT, XTIC_SAU, XTIC_SYR, XTIC_TUN,
XTIC_UAE, XTIC_YEM, GDPTIC_ALG, GDPTIC_BHR,
GDPTIC_EGY, GDPTIC_IRN, GDPTIC_IRQ, GDPTIC_JOR,
GDPTIC_KWT, GDPTIC_LBN, GDPTIC_LBY, GDPTIC_MAR,
GDPTIC_OMN, GDPTIC_QAT, GDPTIC_SAU, GDPTIC_SYR,
GDPTIC_TUN, GDPTIC_UAE, GDPTIC_YEM, LINIC_ALG,
LINIC_BHR, LINIC_EGY, LINIC_IRN, LINIC_IRQ, LINIC_JOR,
LINIC_KWT, LINIC_LBN, LINIC_LBY, LINIC_MAR, LINIC_OMN,
LINIC_QAT, LINIC_SAU, LINIC_SYR, LINIC_TUN, LINIC_UAE,
LINIC_YEM
Exogenous variables: Individual effects, individual linear trends
Automatic selection of maximum lags
Automatic Selection delayed effects on the basis of SIC: 0-4
Newey-West bandwidth selection using Bartlett kernel
Cross-
Statistical Method Obs sections Prob .**
Null: Unit root (assumes common unit root process)
Levin, Lin & Chu t * 51 1.012 0.0000 -15983.7
Breitung t-Stat 0.0299 51 961 -1.88254
Null: Unit root (assumes individual unit root process)
Im, Pesaran and Shin W-Stat 2000.53 51 1.012 0.0000
ADF - Fisher Chi-square 997.442 1012 51 0.0000
PP - Fisher Chi-square 987.951 1.031 0.0000 51
Null: No unit root (assumes common process unit root)
Hadri Z-Stat 18.0027 0.0000 1.061 51
** Probabilities for Fisher tests are computed using a Chi asympotic
Squares distribution. All other tests assume asymptotic normality.
Table 3 - Unit Root Test (variable set 2)
pool unit root test: Summary
Date: 01/28/05 Time: 13:24
Example: 1980 2003
Series: XTRW_BHR XTRW_ALG,, XTRW_EGY, XTRW_IRN,
XTRW_IRQ, XTRW_JOR, XTRW_KWT, XTRW_LBN, XTRW_LBY,
XTRW_MAR, XTRW_OMN, XTRW_QAT, XTRW_SAU,
XTRW_SYR, XTRW_TUN, XTRW_UAE, XTRW_YEM,
GDPTRW_ALG, GDPTRW_BHR, GDPTRW_EGY,
GDPTRW_IRN, GDPTRW_IRQ, GDPTRW_JOR,
GDPTRW_KWT, GDPTRW_LBN, GDPTRW_LBY,
GDPTRW_MAR, GDPTRW_OMN, GDPTRW_QAT,
GDPTRW_SAU, GDPTRW_SYR, GDPTRW_TUN,
GDPTRW_UAE, GDPTRW_YEM, LINRW_ALG, LINRW_BHR,
LINRW_EGY, LINRW_IRN, LINRW_IRQ, LINRW_JOR,
LINRW_KWT, LINRW_LBN, LINRW_LBY, LINRW_MAR,
LINRW_OMN, LINRW_QAT, LINRW_SAU, LINRW_SYR,
LINRW_TUN, LINRW_UAE, LINRW_YEM
Exogenous variables: Individual effects, individual linear trends
The selection Automatic maximum lag
Automatic selection of lags based on SIC: 0-4
Newey-West bandwidth selection using Bartlett kernel
Cross-
Statistical Method sections Obs Prob .**
Null: Unit root (assumes common unit root process)
Levin, Lin & Chu t * 51 998 0.0000 -22022.1
Breitung t-Stat 0.0010 51 947 -3.10329
Null: Unit root (assumes individual process unit root)
Im, Pesaran and Shin W-Stat 0.0000 3454.40 51 998
ADF - Fisher Chi-square 748.777 0.0000 51 998
PP - Fisher Chi-square 727.799 0.0000 1.027 51
Null: No unit root (assumes common unit root process)
Hadri Z-Stat 14.9077 0.0000 1.065 51
** Odds Fisher for testing are calculated using a Chi asympotic
Square distribution. All other tests assume asymptotic normality.
Table 4 - behaviors MENA countries' trade with Muslim countries
Dependent Variable: XTIC?
Method: GLS (Variance Components)
Date: 11/02/1904 Time: 10:25
Sample: 1975 2002
included observations: 28
Number of cross-sections used: 17
Total panel (unbalanced) observations: 364
Standard Variable Rate. Error t-Statistic Prob.
C 771.8152 351.2558 2.197302 0.0286
GDPTIC? 172.0235 33.64398 5.113055 0.0000
LINIC? -3.12E-09 4.45E-10 -7.006903 0.0000
G_GDPTIC? 278.5233 33.99053 8.194144 0.0000
G_LINIC? 1.75E-09 5.04E-07 3.471607 0.0006
Random Effects
_ALG - C -816.3480
_BHR - C -170.2156
_EGY - C -932.7171
_IRN - C -1182.359
_IRQ - C 448.6195
_JOR - C -314.7449
_KWT - C 249.3942
_LBN - C -456.1962
_LBY - C -348.9692
_MAR - C -678.7201
_OMN - C -82.74419
_QAT - C -826.9708
_SAU - C 3883.275
_SYR - C 300.9173
_TUN - C -509.9924
_UAE - C 1491.185
_YEM - C -732.7498
Transform GLS regression
R-squared half dependent var 0.806204 1260.885
R-squared SD dependent var 0.804045 Adjusted 1740.713
SE of regression Sum squared resid 770.5584 2.13E 08
1.938733 Durbin-Watson statistics
Statistics Effects include Random unweighted
R-squared 0.813467 Mean dependent var 1260.885
Adjusted R-squared 0.811389 SD dependent var 1740.713
SE of regression Sum squared resid 755.9813 2.05E 08
1.959710 Durbin-Watson statistics
Table 5 - behavior MENA countries' trade with RM
Variable Dependent XTRW?
Method: GLS (Variance Components)
Date: 11/02/2004 Time: 10:41
Sample: 1975 2002
included observations: 28
Number of sections used: 17
Total panel (unbalanced) observations: 349
Standard Variable Rate. Error t-Statistic Prob.
0.0022 3.080929 7740.308 2512.330 C
GDPTRW? 116986.6 40382.56 2.896959 0.0040
LINRW? -2.78E-08 7.39E-09 -3.763694 0.0002
G_LINRW? 1.93E-08 6.92E-07 2.784526 0.0057
Random Effects
_ALG - C 1791.944
_BHR - C -5145.395
_EGY - C -7095.146
_IRN - C 2628.343
_IRQ - C -413.8024
_JOR - C -8215.257
_KWT - C 827.2209
_LBN - C -9016.838
_LBY - C 131.9288
_MAR - C -5479.285
_OMN - C -4193.818
_QAT - C -3752.049
_SAU - C 33539.94
_SYR - C -6665.189
_TUN - C -5458.853
_UAE - C 10743.85
_YEM - C -8078.223
Transform GLS regression
R-squared 0.738121 var dependent middle of 9530.519
Adjusted R-squared 0.735844 SD dependent var 12827.13
SE of regression Sum squared resid 6592.647 1.50E 10
1.885858 Durbin-Watson statistics
The unweighted statistics include Random Effects
R-squared 0.751595 Mean dependent var 9530.519
Adjusted R-squared 0.749435 SD dependent var 12827.13
SE of regression Sum squared resid 6420.810 1.42E 10
1.890042 Durbin-Watson statistics
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