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Journal of Economic Integration 2023 September;38(3) :360-382.
DOI: https://doi.org/10.11130/jei.2023.38.3.360
The OIC's Intra-Bloc and Extra-Bloc Trade: How Effective are the FTAs?

Amjad Masood1 Junaid Ahmed2 Fatima Olanike Kareem 3

1Bahria University, Islamabad, Pakistan
2Pakistan Institute of Development Economics, Islamabad, Pakistan
3AKADEMIYA2063, Kigali, Rwanda
Corresponding Author: Junaid Ahmed ,Email: junaid.ahmed@pide.org.pk
Copyright ©2023 Journal of Economic Integration
ABSTRACT
The present study evaluates the role of Free Trade Agreements (FTAs) in facilitating trade for the Organization of Islamic Cooperation (OIC) member countries. We used the structural gravity model and the Poisson pseudo-maximum likelihood estimator to examine annual bilateral trade from 2000 to 2019. We find that FTAs have a positive impact, which is more pronounced in the case of the intra-OIC trade. Furthermore, the findings show that the quality of governance in the source country influences the adjustment of the exporting process in response to the entry of an FTA. The majority of OIC countries currently have poor governance. Therefore, improving the governance conditions would encourage trade, particularly for the extra-bloc exports.

JEL Classification
F10: General
F13: Trade Policy; International Trade Organizations
F14: Empirical Studies of Trade
F15: Economic Integration
Keywords: Trade | FTAs | Governance | OIC | Structural Gravity
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