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An Econometric Analysis of India-Sri Lanka Free Trade Agreement

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    Abstract

    This paper investigates whether the India-Sri Lanka Free Trade Agreement (ISLFTA) has had trade creation or trade diversion effects on the rest of the World. The method used resembles the one used by Romalis (2005) to study NAFTA. In order to use the variations in tariff at the product level, we use six digit HS classification of products. We construct seven panel data sets for the period 1996 to 2006. We use the commodity and time variation in the tariff preferences allowed under ISLFTA, to identify its effect on sourcing of different products from ‘control country’ to ISLFTA region. Using fixed effects model we find that the ISLFTA has been minimally trade creating for control countries.

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    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP04-2010.pdf
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    Bibliographic Info

    Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 04-2010.

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    Length: 35 pages
    Date of creation: Mar 2010
    Date of revision:
    Handle: RePEc:gii:giihei:heidwp04-2010

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    Keywords: Free trade agreement; tariffs; trade creation;

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