Product Space Analysis of the Potential Area for Korea-UAE-Israel Trilateral Economic Cooperation

Abstract

The Abraham Accords agreed between the UAE and Israel in 2020 have rapidly developed economic cooperation between the two countries. Despite the economic complementarity between the UAE and Israel in terms of technology and capital resources, they have been seeking trilateral cooperation with third countries due to their small markets and lack of manufacturing capabilities. Korea is an important candidate for their trilateral economic cooperation as it has competitive experience in commercializing cutting-edge technology and strong manufacturing competence. This paper explores potential areas for trilateral economic cooperation to maximize economic complementarity among Korea, the UAE, and Israel. Specifically, the Product Space analysis with BACI trade data suggests potential areas of cooperation for each scenario to increase economic complexity and exports or to decrease import dependency based on each country’s comparative advantage and import demand structure.