Trade flows between Algeria and European Union countries

Abstract

This article aims to empirically analyze the determinants of trade flows between Algeria and the five European Union trading partners, namely, Italy, France, Germany, Spain and Portugal, over the period 1990-2018, using the basic gravity model and the augmented gravity model of international trade. The obtained results show that Algeria’s bilateral trade flows with its trading partners is positively affected by GDP growth, and negatively influenced by economic inequality and geographical distance. There is also evidence that colonial past and trade agreements have a weak impact on Algeria’s trade flows. Moreover, by suppressing trade barriers and concluding bilateral agreements, Algeria has a real trade potential to promote trade exchanges with Germany, France and Spain.