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Macro-economic and trade link models of SAARC countries: an investigation for regional trade expansion

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  • Mohammad Rahman

Abstract

The paper examines the macroeconomic structure of SAARC countries, i.e. Bangladesh, India, Nepal, Pakistan and Sri Lanka. It also explores the possibility of trade expansion among these countries by examining the macro-economic and regional trade link models based on time series data of 28 years. The study finds that there are inter-country differences in production and consumption patterns, investment behaviour, tax and non-tax structures in the SAARC countries. Hence, there is considerable scope for trade expansion among the SAARC countries. The study also confirms that aggregate regional consumption and regional GNP increase significantly with the increase of aggregate regional trade, and the consumption and income elasticities are 1.70 and 1.61 respectively. The study also exhibits that the GNP of Bangladesh, Nepal, Pakistan and Sri Lanka, with limited exceptions, are significantly increased with the increase of their exports to the region. So these countries would definitely benefit from the regional trade expansion. The same may be true for India if the smuggled trade is prevented or reduced, and true economic factors, keeping aside political conflicts, dominate for regional trade policy.

Suggested Citation

  • Mohammad Rahman, 2008. "Macro-economic and trade link models of SAARC countries: an investigation for regional trade expansion," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 13(1), pages 50-62.
    • Handle: RePEc:taf:rjapxx:v:13:y:2008:i:1:p:50-62
    DOI: 10.1080/13547860701731853
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    Cited by:

    1. Muhammad Nasir, 2019. "Economic Interaction Between Malaysia and North Sumatra: An Analysis With Vector Error Correction Model and Granger Causality," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 61-70.
    2. Deeti Saha, 2020. "Comparative Analysis of Economic Performance of SAARC Countries Based on the Estimated Cobb-Douglas Production Function," International Journal of Science and Business, IJSAB International, vol. 4(10), pages 39-63.

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