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Trade and Income Convergence in Selected South Asian Countries and Their Trading Partners

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  • Ahmed Nawaz Hakro

    ()
    (College of Economics, Management and Information Systems, University of Nizwa, Oman.)

  • Bashir Ahmad Fida

    ()

Abstract

This paper analyzes trade among and the convergence of per capita income for India, Pakistan, Bangladesh, and Sri Lanka. The extent of trade and its relationship with the magnitude of income convergence is studied among these countries and their trading partners. We use intra-trade convergence and the difference-in-differences approach for the estimations. The results demonstrate that an increase in trade between the groups decreases the per capita income differential. Our results suggest that trade liberalization policies could be effective in achieving convergence. More importantly, we find that the per capita income of our source countries converged more rapidly under post-liberalization regimes than pre-liberalization regimes.

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Bibliographic Info

Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

Volume (Year): 14 (2009)
Issue (Month): 2 (Jul-Dec)
Pages: 49-70

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Handle: RePEc:lje:journl:v:14:y:2009:i:2:p:49-70

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Related research

Keywords: Intra-trade; income convergence; per capita income; South Asia.;

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References

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  1. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  2. Dan Ben-David & Michael B. Loewy, 1997. "Free Trade, Growth, and Convergence," NBER Working Papers 6095, National Bureau of Economic Research, Inc.
  3. Ben-David, D., 1995. "Trade and Convergence Among Countries," Papers 35-95, Tel Aviv.
  4. Ben-David, Dan & Kimhi, Ayal, 2000. "Trade And The Rate Of Income Convergence," CEPR Discussion Papers 2390, C.E.P.R. Discussion Papers.
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  9. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
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  14. Slaughter, Matthew J, 1997. "Per Capita Income Convergence and the Role of International Trade," American Economic Review, American Economic Association, vol. 87(2), pages 194-99, May.
  15. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
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  17. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  18. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  19. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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  21. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.
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