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Regional Integration in South Asia: An Analysis of Trade Flows Using the Gravity Model


  • Naseem Akhter

    (Pakistan Institute of Development Economics, Islamabad)

  • Ejaz Ghani

    (Pakistan Institute of Development Economics, Islamabad)


The study deals with trade benefits from the free trade agreement of the SAARC countries. It assesses the trade potential and trade creation with member and non-member countries. The gravity model has been used to measure the bilateral trade flows and to assess the trade effect for member and non-member countries. Two analyses estimate the gravity model. The first analysis is based on cross-sectional data to capture the trade effect individually each year; and the second analysis utilises the pooled data to measure the overall trade effects and trade flows for the period 2003 to 2008. The results from the two approaches show that estimated coefficients are consistent with the model assumptions. Both analyses show that the regional trade agreement of the SAARC countries could divert the trade for member countries as well as for the non-member countries. However, trade volume will increase only if the major partners (Pakistan, India, and Sri Lanka) sign regional trade agreements.

Suggested Citation

  • Naseem Akhter & Ejaz Ghani, 2010. "Regional Integration in South Asia: An Analysis of Trade Flows Using the Gravity Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(2), pages 105-118.
  • Handle: RePEc:pid:journl:v:49:y:2010:i:2:p:105-118

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    Cited by:

    1. Peter Morgan & Michael G. Plummer & Ganeshan Wignaraja & Fan Zhai, 2015. "Economic Implications of Deeper South Asian–Southeast Asian Integration: A CGE Approach," Asian Economic Papers, MIT Press, vol. 14(3), pages 63-81, Fall.
    2. repec:ksa:szemle:1720 is not listed on IDEAS
    3. Sultan, Maryam & Munir, Kashif, 2015. "Export, Import and Total Trade Potential of Pakistan: A Gravity Model Approach," MPRA Paper 66621, University Library of Munich, Germany.

    More about this item


    Trade; Regional Integration; Gravity Model;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration


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