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Economic Implications of Deeper South Asian–Southeast Asian Integration: A CGE Approach

Author

Listed:
  • Peter Morgan

    (ADB Institute)

  • Michael G. Plummer

    (SAIS The Johns Hopkins University Via Belmeloro)

  • Ganeshan Wignaraja

    (Economic Research and Regional Cooperation Department)

  • Fan Zhai

    (Deptartment of Asset Allocation and Strategic Research Chinese Investment Corporation)

Abstract

Using a computable general equilibrium model, this paper estimates the potential gains from deepening integration across South Asia and Southeast Asia. If the two regions succeed in dropping inter-regional tariffs, reducing non-tariff barriers by 50 percent, and decreasing inter-regional trade costs by 15 percent—which the paper suggests are ambitious but nevertheless attainable—welfare in South Asia and Southeast Asia would rise by 8.9 percent and 6.4 percent of GDP, respectively, by 2030. Hence, we conclude that deepening South Asian regional cooperation together with building links to Southeast Asia would pay off rich dividends.

Suggested Citation

  • 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.
    • Handle: RePEc:tpr:asiaec:v:14:y:2015:i:3:p:63-81
    as

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    References listed on IDEAS

    as
    1. Zhai, Fan, 2008. "Armington Meets Melitz: Introducing Firm Heterogeneity in a Global CGE Model of Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 575-604.
    2. Kumagai, Satoru & Hayakawa, Kazunobu & Isono, Ikumo & Keola, Souknilanh & Tsubota, Kenmei, 2013. "Geographical simulation analysis for logistics enhancement in Asia," Economic Modelling, Elsevier, vol. 34(C), pages 145-153.
    3. 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.
    4. Joseph Francis Francois & Ganeshan Wignaraja, 2008. "Economic Implications of Deeper Asian Integration," Economics working papers 2008-13, Department of Economics, Johannes Kepler University Linz, Austria.
    5. S.K. Mohanty & Sanjib Pohit, 2007. "Welfare Gains from Regional Economic Integration in Asia : ASEAN+3 or EAS," Macroeconomics Working Papers 22121, East Asian Bureau of Economic Research.
    6. Francois Joseph F & Wignaraja Ganeshan, 2008. "Economic Implications of Asian Integration," Global Economy Journal, De Gruyter, vol. 8(3), pages 1-48, September.
    7. 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.
    8. Dushni Weerakoon, 2010. "The Political Economy of Trade Integration in South Asia: The Role of India," The World Economy, Wiley Blackwell, vol. 33(7), pages 916-927, July.
    9. Joseph Francois & Pradumna B. Rana & Ganeshan Wignaraja, 2009. "Introduction and Overview," Palgrave Macmillan Books, in: Joseph Francois & Pradumna B. Rana & Ganeshan Wignaraja (ed.), Pan-Asian Integration, chapter 1, pages 1-59, Palgrave Macmillan.
    10. 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.
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    Cited by:

    1. Bhattacharyay, Biswa Nath & Mukhopadhyay, Kakali, 2015. "A comprehensive economic partnership between India and Japan: Impact, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 39(C), pages 94-107.
    2. Euijune Kim & Seung‐Woon Moon & Yoojin Yi, 2021. "Analyzing spillover effects of development of Asian highway on regional growth of Northeast Asian countries," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1243-1266, August.

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    More about this item

    Keywords

    computable general equilibrium model; South Asia; Southeast Asia; non-tariff barriers;
    All these keywords.

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • E - Macroeconomics and Monetary Economics

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