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The Imperfect Substitutes Model in South Asia

Author

Listed:
  • Sasidaran Gopalan
  • Ammar A. Malik
  • Kenneth A. Reinert

Abstract

In large number of circumstances, trade policy modellers turn to partial equilibrium modelling in an imperfect substitutes framework. This article develops a formal representation of this imperfect substitutes model and applies it to trade liberalization within the negative list between Pakistan and India following Pakistan’s decision to grant most favoured nation (MFN) status to India. It provides estimates for ranges of output and welfare effects for a number of sectors of interest. It sets these results within the history of Pakistan–India trade and the political economy of the negative list.

Suggested Citation

  • Sasidaran Gopalan & Ammar A. Malik & Kenneth A. Reinert, 2013. "The Imperfect Substitutes Model in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(2), pages 211-230, September.
    • Handle: RePEc:sae:soueco:v:14:y:2013:i:2:p:211-230
    DOI: 10.1177/1391561413500170
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    References listed on IDEAS

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    1. Baldwin, R E & Murray, Tracy, 1977. "MFN Tariff Reductions and Developing Country Trade Benefits under the GSP," Economic Journal, Royal Economic Society, vol. 87(345), pages 30-46, March.
    2. Samina Shabir & Reema Kazmi, 2007. "Economic Effects of the Recently Signed Pak-China Free Trade Agreement," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(Special E), pages 174-202, September.
    3. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
    4. Syed Mansoob Murshed & Dawood Mamoon, 2010. "Not loving thy neighbour as thyself: Trade, democracy and military expenditure explanations underlying India—Pakistan rivalry," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(4), pages 463-476, July.
    5. 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.
    6. De, Prabir & Raihan, Selim & Ghani, Ejaz, 2013. "What does MFN trade mean for India and Pakistan ? can MFN be a Panacea ?," Policy Research Working Paper Series 6483, The World Bank.
    7. 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.
    8. Clinton R. Shiells & Kenneth A. Reinert, 1993. "Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 299-316, May.
    9. Burns, Michael E, 1973. "A Note on the Concept and Measure of Consumer's Surplus," American Economic Review, American Economic Association, vol. 63(3), pages 335-344, June.
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    Citations

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    Cited by:

    1. Naheed Memon & Faiza Rehman & Fazal Rabbi, 2014. "Should Pakistan Liberalize Trade With India Against the Backdrop of the FTA with China? A Comparative Advantage Analysis for the Manufacturing Sector," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 327-348, September.
    2. Vaqar Ahmed & Samavia Batool, 2017. "India-Pakistan Trade: Perspectives from the Automobile Sector in Pakistan," Working Papers id:12263, eSocialSciences.
    3. Kamal, Asmma, 2016. "Beyond Normalization of Trade Ties - A Pakistan – India Free Trade Agreement (FTA): A Stochastic Frontier Gravity Model (SFGM) Approach," MPRA Paper 87743, University Library of Munich, Germany.
    4. Nasir Iqbal & Saima Nawaz, 2017. "Pakistan’s Bilateral Trade under MFN and SAFTA: Do Institutional and Non-Institutional Arrangements Matter?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 56(1), pages 59-78.

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    More about this item

    Keywords

    Imperfect substitutes model; Pakistan; India; trade; liberalization;
    All these keywords.

    JEL classification:

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

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