Macro and Micro Economics


The Pan Arab Free Trade Area (PAFTA) was established on the February 27, 1981 with an aim of facilitation and development of trade among the Arab States with a total of seventeen members. Its main aim was to allow member states to freely import and export their products by eliminating non-barrier tariffs taxes hence encouraging inter and intra-trade not only among the member states but also with other non-member states (Hoekman & Sekkat, 2010).

The formation of the regional trade groups was motivated by the push for larger regional and global trade integration of the Arab world which could result in opening the region to the rest of the world. This agreement has therefore made it possible for member states to make contact not only amongst themselves but also with the rest of the world quite easily. Further, relatively lower costs have been enjoyed compared to other agreements like COMESA and ECOWAS which subject their members to general rules (Andreea-Florina, 2014).

United Arab Emirates is one of the member states and is rated second largest in terms of economy after Saudi Arabia as far as exportation is concerned in the Arab world. For the past few years it has stood very reliable in exportation of petroleum oil and this has yielded up to 85% of the state’s economy. For instance, in 2011 oil exports in Dubai accounted for 77% of the UAE’s budget. The trend of this product has been relatively high for the past five years contributing to an expected GDP of 4-4.5% compared to 2.3-3.5% in the previous years. According to Harb and Shady (2016), United Arab Emirates became position 29 in the leading world exporters in petroleum products and diamond and gold which totaled to $98.8B in 2016. These trends continue to place United Arab Emirates at top position in exportation.  

Due to the financial crisis in UAE are neighboring regions, the growth rate has been declining over the years.  For instance, the GDP in 2012 was 5.1%, 2013-5.8%, 2014-3.3%, 2015-3.8% and 2016-3.04%.  The average economic growth rate therefore rests at around 3% presently.

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  1. Andreea-Florina, F. (2014). Regional Trade Agreements and Competition Policy. Case Study: EU, ASEAN and NAFTA. Annals of the University of Oradea, Economic Science Series, 23(1), 86-92.
  2. Harb, G., & Shady, N. A. (2016). Arab Trade Dynamics after the Implementation of the Pan Arab Free Trade Area (1998–2012). Review of Middle East Economics and Finance12(1), 1-29.
  3. Hoekman, B., & Sekkat, K. (2010). Arab economic integration: missing links. J. World Trade44, 1273.
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