The competitive advantage in The Middle East. An empirical approach

This paper explores the determinants of bilateral trade flows among Jordan, Israel and the Palestinian territories during the last 15 years. A gravity model is applied to international trade flows and empirically tested in order to investigate the relationship between the volume and direction of international trade in order to identify competitive advantage areas. Furthermore, the standard gravity model is augmented with additional variables to test whether they are relevant in explaining trade. These variables are infrastructure endowments and per capita incomes. Finally, we analyse to what extent potentials for trade between these two economic areas are important.