IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v26y2003i9p1293-1323.html
   My bibliography  Save this article

How Desirable is the South Asian Free Trade Area? A Quantitative Economic Assessment

Author

Listed:
  • Jayatilleke S. Bandara
  • Wusheng Yu

Abstract

The proliferation of preferential trading agreements (PTAs) in different regions of the world has been a significant development over the last two decades. South Asian countries have been slowly moving towards a South Asia Free Trade Area (SAFTA) in recent years. The desirability of SAFTA has been questioned by some observers recently. Will SAFTA create gains for its members or not? Is it better for South Asian countries to promote non‐discriminatory trade liberalisation rather than SAFTA? The main objective of this paper is to address the above questions, especially the desirability of SAFTA, using a global computable general equilibrium (CGE) model. From the existing empirical and theoretical studies, we have identified three viewpoints on the desirability (or viability) of SAFTA: pessimistic, optimistic, and moderate. The results from two policy scenarios (unilateral liberalisation and SAFTA) confirm the pessimistic view by showing that unilateral liberalisation would benefit South Asian countries much more than preferential liberalisation (SAFTA). In fact, under preferential liberalisation, small countries in the region would gain little or even lose. The present political climate in South Asia also seems to support the pessimistic view.

Suggested Citation

  • Jayatilleke S. Bandara & Wusheng Yu, 2003. "How Desirable is the South Asian Free Trade Area? A Quantitative Economic Assessment," The World Economy, Wiley Blackwell, vol. 26(9), pages 1293-1323, September.
    • Handle: RePEc:bla:worlde:v:26:y:2003:i:9:p:1293-1323
    DOI: 10.1046/j.1467-9701.2003.00574.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1046/j.1467-9701.2003.00574.x
    Download Restriction: no
    File URL: https://libkey.io/10.1046/j.1467-9701.2003.00574.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lahiri, Sajal, 1998. "Controversy: Regionalism versus Multilateralism," Economic Journal, Royal Economic Society, vol. 108(449), pages 1126-1127, July.
    2. Arvind Panagariya, 1999. "Trade Policy in South Asia: Recent Liberalisation and Future Agenda," The World Economy, Wiley Blackwell, vol. 22(3), pages 353-378, May.
    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    4. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
    5. M. Akhlaqur Rahman & Ayubur Rahman Bhuyan & Sadrel Reza, 1981. "The Trade Effects of a South Asian Customs Union. An Expository Study," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 20(1), pages 61-80.
    6. Robinson, Sherman & Thierfelder, Karen, 2002. "Trade liberalisation and regional integration: the search for large numbers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-20.
    7. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, April.
    8. Martin,Will & Winters,L. Alan (ed.), 1996. "The Uruguay Round and the Developing Countries," Cambridge Books, Cambridge University Press, number 9780521586016, Enero-Abr.
    9. Khan, Saleem M., 1999. "South Asian Association for Regional Cooperation1, 2, 3, 4," Journal of Asian Economics, Elsevier, vol. 10(3), pages 489-495.
    10. Harry Flam, 1992. "Product Markets and 1992: Full Integration, Large Gains?," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 7-30, Fall.
    11. World Bank, 2000. "Global Economic Prospects and the Developing Countries 2000," World Bank Publications - Books, The World Bank Group, number 14776, April.
    12. DeRosa, Dean A. & Govindan, Kumaresan, 1996. "Agriculture, trade, and regionalism in South Asia," Journal of Asian Economics, Elsevier, vol. 7(2), pages 293-315.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A. Ganesh Kumar & Gordhan Kumar Saini, 2007. "Economic co-operation in South Asia: The Dilemma of SAFTA and beyond," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2007-017, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. A. Ganesh Kumar & Gordhan K. Saini, 2009. "Economic Cooperation in South Asia," Journal of South Asian Development, , vol. 4(2), pages 253-281, July.
    3. Chen, Shenjie, 2004. "The Variety Effects of Trade Liberalization," Conference papers 331222, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Jayatilleke S. Bandara & Wusheng Yu, 2007. "Agricultural trade liberalization in the Asia-Pacific region with specific reference to preferential trade agreements - scenario and impact analysis," STUDIES IN TRADE AND INVESTMENT, in: Studies in Trade and Investment - AGRICULTURAL TRADE - PLANTING THE SEEDS OF REGIONAL LIBERALIZATION IN ASIA, volume 60, pages 131-162, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    5. Xiao-guang Zhang & George Verikios, 2006. "Providing Duty-Free Access to Australian Markets for Least-Developed COuntries: a General Equilibrium Analysis," Economics Discussion / Working Papers 06-09, The University of Western Australia, Department of Economics.
    6. Michalopoulos, Constantine & Ng, Francis, 2013. "Developing country trade policies and market access issues : 1990-2012," Policy Research Working Paper Series 6463, The World Bank.
    7. Jeffrey D. Lewis & Sherman Robinson & Karen Thierfelder, 2003. "Free Trade Agreements and the SADC Economies," Journal of African Economies, Centre for the Study of African Economies, vol. 12(2), pages 156-206, June.
    8. Dean A. DeRosa & John P. Gilbert, 2005. "Predicting Trade Expansion under FTAs and Multilateral Agreements," Working Paper Series WP05-13, Peterson Institute for International Economics.
    9. Gutiérrez, Gabriel, 2005. "Ex-post evaluation of the employment effects of a preferential trade agreement: methodological issues, illustrated with a reference to Chile," Comercio Internacional 4399, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Philippa Dee, 2005. "The Australia-US Free Trade Agreement: An Assessment," Asia Pacific Economic Papers 345, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    11. E. M. Ekanayake & John R. Ledgerwood, 2009. "An Analysis Of The Intra-Regional Trade In The Middle East And North Africa Region," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(1), pages 19-29.
    12. Philippa Dee, 2005. "The Australia–US Free Trade Agreement - An Assessment," Trade Working Papers 22309, East Asian Bureau of Economic Research.
    13. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May.
    14. Sangeeta Khorana & Badri G. Narayanan, 2017. "Modelling Effects of Tariff Liberalisation on India’s Key Export Sectors: Analysis of the EU–India Free Trade Agreement," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 11(1), pages 1-22, February.
    15. Walmsley, Terrie L. & Hertel, Thomas W. & Ianchovichina, Elena, 2001. "Assessing the Impact of China’s WTO Accession on Foreign Ownership," Conference papers 330941, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Salvador Gil & Rafael Llorca & J. Antonio Martínez‐Serrano, 2008. "Assessing the Enlargement and Deepening of the European Union," The World Economy, Wiley Blackwell, vol. 31(9), pages 1253-1272, September.
    17. Kym Anderson, 2003. "Trade Liberalization, Agriculture, and Poverty in Low-income Countries," WIDER Working Paper Series DP2003-25, World Institute for Development Economic Research (UNU-WIDER).
    18. Gouranga Gopal Das & Soamiely Andriamananjara, 2006. "Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 33-66, April.
    19. Mr. Tubagus Feridhanusetyawan, 2005. "Preferential Trade Agreements in the Asia-Pacific Region," IMF Working Papers 2005/149, International Monetary Fund.
    20. Berger, Helge & Nitsch, Volker, 2008. "Gotcha! A Profile of Smuggling in International Trade," Conference papers 331735, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:26:y:2003:i:9:p:1293-1323. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.