THE ECONOMIC GROWTH EFFECTS OF THE EUROMED FTA

Abstract

This paper analyzes the economic growth effect of Euro-Mediterranean Free Trade Agreement on European Union and Middle East and North Africa countries with using panel cointegration analysis for the period 1996-2011. In the first step, heterogeneity and cross-section dependence among countries were tested and found that all series have cross-section dependence. For that reason, second generation panel unit root and panel cointegration tests were used. This paper also gives country-specific results at the long-run model via using Common Correlated Effect Model. This contribution provides crucial information about the European Union countries and Middle East and North Africa countries.