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Economic Integration And Trade Protection: Policy Issues For South Asian Countries

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  • Mausumi Kar

Abstract

This article shows that economic integration acts as a viable instrument of protection for individual countries, when benefits of discriminatory protectionist policies like the multifiber arrangement are withdrawn. Using United Nations Conference on Trade and Development statistics for 1995–2013 and applying an extended version of the augmented gravity model, we show that the formation of a trade bloc like the South Asian Free Trade Area unambiguously promotes member countries' exports of textile and clothing at both intra‐bloc and extra‐bloc levels. The expansion of south‐south trade is facilitated by the growing intraregional trade in intermediate goods. The creation of a regional value chain can shield the smaller countries in the context of enhanced global competition. (JEL F14, F15, F13)

Suggested Citation

  • Mausumi Kar, 2018. "Economic Integration And Trade Protection: Policy Issues For South Asian Countries," Contemporary Economic Policy, Western Economic Association International, vol. 36(1), pages 167-182, January.
    • Handle: RePEc:bla:coecpo:v:36:y:2018:i:1:p:167-182
    DOI: 10.1111/coep.12239
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    References listed on IDEAS

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    Cited by:

    1. Yoon Heo & Nguyen Khanh Doanh, 2020. "Is NAFTA Trade‐Creating or Trade‐Diverting? A System GMM Approach," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 222-238, September.

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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