Research On Yemen Foreign Trade And Economy Development Strategy Optimization

Located in the southwestern tip of the Arabian Peninsula, Yemen is economically backward and one of the least developed countries. The foreign trade of Yemen over relied on oil exports; other sectors didn’t achieve a corresponding development. Due to the volatility of oil prices in recent years, the foreign trade deficit of Yemen arises, and the deficit becomes lager and lager. In order to achieve stable and sustainable economic growth, Yemen must optimize foreign trade and economic development strategy.Yemen’s imports and exports increased, while the trade deficit was widening and the structure of import and export commodities were imbalanced. The source of imports is stable; however the exports market is over-centralized. Existing resource-oriented export strategy is difficult to achieve dynamic benefits and makes economic external dependence enhanced, thus hard to achieve sustainable development. Learning from foreign trade-related economic theory and the practice of developing countries, Yemen is recommended to select protective export promotion strategy. It needs to protect industries such as food processing industry, electrical industry and water transportation,while industries suited for encourage to export include fishing (fish) and specialty agriculture (fruit, coffee). The empirical results of gravity model shows that joining the Greater Arab Free Trade Area played a role in promoting exports for Yemen, but the effect was extremely limited. A better option for Yemen is to join the Gulf Cooperation Council (GCC). Yemen should seek help from more countries, develop a diversified economy, and increase financial input to help the poor, reduce unemployment, improve the investment environment and strengthen infrastructure construction. Bilateral trade is highly complementary between Yemen and China. Besides China has become the largest export destination, the fifth largest source of imports and the largest trading partner of Yemen, while the investment of China in Yemen has developed rapidly. It requires the joint efforts of both sides to make a higher level of economic cooperation.