International Journal of Economics, Finance and Management Sciences 2013; 1(6): 285-291 Published online October 20, 2013 (http://www.sciencepublishinggroup.com/j/ijefm) doi: 10.11648/j.ijefm.20130106.14 The Arab Maghreb Union: the "cost of non Maghreb" and sectoral prospects Adnen OUESLATI, Riadh BRINI PhD in Economics, Business and Economics University of Tunis Email address: wesadnen@yahoo.fr(A. OUESLATI), riadh_brini@yahoo.fr(R. BRINI) To cite this article: Adnen OUESLATI, Riadh BRINI. The Arab Maghreb Union: the "Cost of Non Maghreb" and Sectoral Prospects. International Journal of Economics, Finance and Management Sciences. Vol. 1, No. 6, 2013, pp. 285-291. doi: 10.11648/j.ijefm.20130106.14 Abstract: The aim of the paper is to find out the “No Maghreb” cost as untapped opportunities of intra regional trade and to check the existence of comparative advantages in the Maghreb region. We use panel data with gravity model to study the relationship between total exports and factors affecting them, as well as, the exports by sector and their determinants for a sample of 57 countries, between, 1980-2007. The goal is to point out the total exports potential as a proxy of the “No Maghreb” cost. The study also allows establishing whether there are comparative advantages among the region countries. The results show the weak level of intra regional trade comparing to its potential. They also demonstrate that Maghreb countries have similarities and disparities according to some comparative advantages. This contributes to encourage intra regional trade and improve trade perspectives in Maghreb. Keywords: Trade Integration, No Cost Maghreb, Comparative Advantage, Potential Commercial Model Gravity 1. Introduction Regional integration has become an economic necessity, given the intense competition that engages regional blocs. Due to its role in growth and the increased trade between the countries of the region, the Maghreb integration could be a factor in support for more efficient integration of Maghreb countries to the global economy. Even if integration is still quite low in the Maghreb, countries have tried to implement regional integration mechanisms to accelerate economic development over the past twenty years An Intra Maghreb exchange does not exceed 3% of the total trade of each country. It is an extremely low percentage compared to that made by regional groupings of similar level of development (EU, ALINA, ASEAN, etc.) Given the importance of that suggested integration and the inescapable necessity for a closer economic partnership between the countries of the region, it would be useful to identify the contours of the Maghreb integration. To do so, we can assess the potential of exchange that may arise from the fulfillment of the Maghreb project. This work allows us to deduce partially the comparative advantages of different countries in the region, and subsequently, the possibilities of intra-regional trade. In this paper, a gravity model is estimated to calculate in a first step, the potential level of trade relative to its current level given the economic, geographical, historical and cultural of countries in the region. The potential difference between the calculated and the observed level is the "cost of non-Maghreb". In a second step, by calculating the trade potential by sector, we deduced the comparative advantages of different countries in the region, and therefore the prospects for intra-regional trade. This article is organized as follows. In the next section we conduct a literature review on the potential trade of Arab countries. The third section presents the theoretical basis of the gravity model. In the fourth section we present our model, the variables and the data sources. The last section is devoted to present and analyze the results for the econometric estimates and the results of the calculation of the potential total trade sector. 2. Review of Literature The gravity model has been used in the literature to assess the integration of the CEECs to the EU. The conclusions and recommendations made by the authors, especially Fontagné et al (2002), are quite mixed and depend on the period of the specification of the model used and the econometric methods used in the calculation of trade potential.