Determinants of intra-regional Agriculture trade intensity: Case study of ECO

This paper investigates the determinants of intra-regional Agriculture trade intensity in ECO during 1993-2012. We use a general gravity model that focus on gravity variables and likewise other important variable including agricultural similarity, fiscal supporting policy similarity and trade openness. The results indicate that bilateral real exchange rate and trade openness increase intra-regional Agriculture trade intensity, while cross GDP per capita, exchange rate volatilities and distance decrease it. Of course, the effect of distance has is not significant. Also, more agricultural dissimilarity between a pair of countries induces the higher agricultural trade intensity. In other words, the Heckscher-Ohlin theory is confirmed for agricultural trade in ECO region. Likewise, more fiscal supporting policy similarity causes to increase agricultural trade intensity among ECO members.