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This paper analyzes the intra-regional trade and investment flows in the Middle East and North Africa (MENA) region using an augmented gravity model applied to panel data. The study uses annual trade and investment data for the period 1980-2006. There is a growing awareness among countries in the MENA region regarding the importance of international trade and foreign direct investment for stimulating growth and integrating into the world economy. The research will attempt to achieve the following objectives: (a) analyze the intra-regional trade and investment flows in the MENA region; (b) identify the major determinants of trade and investment flows in the MENA region using an augmented gravity model applied to panel data; and (c) measure the effect of preferential trading arrangements in the region on members’ trade and investment with other MENA countries.
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