Trade Potential for the Countries of the South West Asia Region Block

The main purpose of this paper is to investigate the trade potential and its effects on increasing bilateral trade between the South West Asia regions, countries. Therefor, this paper aims to answer this question that: Could trade cooperation the South West Asia region's countries led to increase bilateral trade? To answer this question, Generalized Gravity Model is used and it is estimated by Panel Data method. The results indicate that GDP and geographical distance as independent variables, justify economic cooperation between them, mostly. This can lead to an increase in bilateral trade cooperation between these countries. The results show that the trade potential of the Iranian economy and the integration to the other members of the South West Asia region countries as a 61 percent in trade and also increase the value of bilateral trade flows between these countries.