Open AccessFree Trade Agreement between Tunisia and the European Union, Do Institutions Matter?: An Empirical Validation by A Gravity Model
Author(s) -
Anis Kacem
Publication year - 2015
Publication title -
journal of asian business strategy
Language(s) - English
Resource type - Journals
eISSN - 2309-8295
pISSN - 2225-4226
DOI - 10.18488/journal.1006/2015.5.2/1006.2.19.36
Subject(s) - european union , gravity model of trade , context (archaeology) , international trade , customs union , spatial econometrics , dimension (graph theory) , geographical distance , international economics , geography , economics , economic geography , econometrics , mathematics , demography , sociology , population , archaeology , pure mathematics
Tunisia has signed a free trade agreement with the European Union in 1996, which provides for the reduction of tariff barriers between Tunisia and the EU. In this article, we aim to know and test whether the similarity of the institutional framework has to stimulate international trade between Tunisia and the European Union. In this context, we built a variable called “Institutional distance” to valid the institutional dimension of international trade, near borders effects reported in the literature. To this end, a gravity model was used initially (Tunisia and 21 European countries). Secondly, the estimate shows the existence of spatial autocorrelation. The latter has been corrected using spatial econometrics. The results show that the geographical distance remains more important than the institutions in this type of agreement between north and south shores of the Mediterranean.