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Does Democracy Increase Bilateral Trade in MENA Region?

Author

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  • Roesmara Donna, Duddy
  • Widodo, Tri
  • Adiningsih, Sri

Abstract

This paper aims to analyze the effects of democracy to the trade of countries in MENA Regions. The Gravity Model used to test the effects of democracy on trade. Estimation is done with several models, that is FE, RE, MLE, and PPML. From this estimation can be detected endogenity problem that is caused by simultaneity between export and democracy. The FE model with the infant mortality rate as instrumental variable was chosen to address the problem. After controlling endogenity, it can be concluded that democracy positively affects (3-4 per cent) of trade in MENA Regions, especially democracy in partner countries.

Suggested Citation

  • Roesmara Donna, Duddy & Widodo, Tri & Adiningsih, Sri, 2018. "Does Democracy Increase Bilateral Trade in MENA Region?," MPRA Paper 86369, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:86369
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    References listed on IDEAS

    as
    1. Balding, Christopher, 2011. "A Re-examination of the Relation between Democracy and International Trade The Case of Africa," WIDER Working Paper Series 059, World Institute for Development Economic Research (UNU-WIDER).
    2. Edward D. Mansfield & Helen V. Milner & B. Peter Rosendorff, 2015. "Free to Trade: Democracies, Autocracies, and International Trade," World Scientific Book Chapters, in: Edward D Mansfield (ed.), THE POLITICAL ECONOMY OF INTERNATIONAL TRADE, chapter 7, pages 127-143, World Scientific Publishing Co. Pte. Ltd..
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    4. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
    5. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    6. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    7. Paldam, Martin, 2003. "Economic freedom and the success of the Asian tigers: an essay on controversy," European Journal of Political Economy, Elsevier, vol. 19(3), pages 453-477, September.
    8. Jessica Decker & Jamus Lim, 2009. "Democracy and trade: an empirical study," Economics of Governance, Springer, vol. 10(2), pages 165-186, April.
    9. Khan, Zakir Saadullah & Hossain, M Ismail, 2010. "Democracy and Trade Balance: A Vector Autoregressive Analysis," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 33(4), pages 23-37, December.
    10. repec:dau:papers:123456789/4103 is not listed on IDEAS
    11. Kono, Daniel Y., 2006. "Optimal Obfuscation: Democracy and Trade Policy Transparency," American Political Science Review, Cambridge University Press, vol. 100(3), pages 369-384, August.
    12. Christopher Balding, 2011. "A re-examination of the relation between democracy and international trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(5), pages 585-603, July.
    13. Ross, Michael & Kaiser, Kai & Mazaheri, Nimah, 2011. "The"resource curse"in MENA ? political transitions, resource wealth, economic shocks, and conflict risk," Policy Research Working Paper Series 5742, The World Bank.
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    15. Yu, Miaojie, 2010. "Trade, democracy, and the gravity equation," Journal of Development Economics, Elsevier, vol. 91(2), pages 289-300, March.
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    Cited by:

    1. Esmat Mostafa Kamel, 2021. "The MENA region's need for more democracy and less bureaucracy: A gravity model controlling for aspects of governance and trade freedom in MENA," The World Economy, Wiley Blackwell, vol. 44(6), pages 1885-1912, June.

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    More about this item

    Keywords

    trade; export; democracy; Gravity Model; MENA.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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    This paper has been announced in the following NEP Reports:

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