This study uses spatial-gravity models to examine intra-industry trade flow based on technological intensity for a cluster of the main EU-advanced economies (Spain, France, Germany, Italy, and Greece) and MEDA-transitional economies (Morocco, Algeria, Tunisia, Libya, Egypt, Israel, Jordan, Lebanon, Syria, and Turkey) from 1990 to 2020. We have inserted into the models in an original way the variables of cultural affinity to grasp the effects of the liability of foreignness. We also consider the upheavals began with the “global economic crisis” (2007–2008), including the “sovereign debt crisis” for EU countries (2009–2011), and the “Arab Springs” for MEDA-transitional economies (2011–012). Results show the SAR-AR specification used to estimate our models is correct, and variables to catch the liability of foreignness make for more suitable regression. We have found significant trade flows with one order of lags, as a proxy for a persistence effect in trade flows, as well as other explanatory variables such as industry middle productivity, openness, stock market capitalization, and the exchange rate. While tariff barriers, remittance in- and outflows, and dummy variables that capture the effect of partnership agreements and the upheavals are less significant, nonetheless, these two effects have been found to be significant in the low-tech and service industries. We also found that improvements in the governance climate in EU-advanced economies have a negative effect on intra-industry trade flow, whereas improvements in the governance climate in MEDA-transitional economies have a positive effect, but only for high-tech production and services. We conclude that it is important for the European Union to have traced new guidelines to Euro-Mediterranean (Euro-Med) common action through cooperation in order to avoid the deterioration of political and economic relations between the countries in the Euro-Med region.

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