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An Econometric Analysis of India-Sri Lanka Free Trade Agreement

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Abstract

This paper investigates whether the India-Sri Lanka Free Trade Agreement (ISLFTA) has had trade creation or trade diversion effects on the rest of the World. The method used resembles the one used by Romalis (2005) to study NAFTA. In order to use the variations in tariff at the product level, we use six digit HS classification of products. We construct seven panel data sets for the period 1996 to 2006. We use the commodity and time variation in the tariff preferences allowed under ISLFTA, to identify its effect on sourcing of different products from ‘control country’ to ISLFTA region. Using fixed effects model we find that the ISLFTA has been minimally trade creating for control countries.

Suggested Citation

  • Vivek Joshi, 2010. "An Econometric Analysis of India-Sri Lanka Free Trade Agreement," IHEID Working Papers 04-2010, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp04-2010
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    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP04-2010.pdf
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    References listed on IDEAS

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    1. Dean A. DeRosa, 2007. "The Trade Effects of Preferential Arrangements: New Evidence from the Australia Productivity Commission," Working Paper Series WP07-1, Peterson Institute for International Economics.
    2. Susanto, Dwi & Rosson, C. Parr & Adcock, Flynn J., 2007. "Trade Creation and Trade Diversion in the North American Free Trade Agreement: The Case of the Agricultural Sector," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 39(1), pages 121-134, April.
    3. World Bank, 2005. "Global Economic Prospects 2005 : Trade, Regionalism and Development," World Bank Publications - Books, The World Bank Group, number 14783, December.
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    Cited by:

    1. Kumar Gaurav & Nalin Bharti, 2019. "Some Common Lessons from Uncommon FTAs," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 138-157, March.
    2. Saman Kelegama, 2015. "The India–Sri Lanka Free Trade Agreement and the Proposed Comprehensive Economic Partnership Agreement: A Closer Look," Working Papers id:6597, eSocialSciences.
    3. Rahul Tripathi, 2014. "Is there a Global South? A Perspective from South Asia," South Asian Survey, , vol. 21(1-2), pages 138-150, March.

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    More about this item

    Keywords

    Free trade agreement; tariffs; trade creation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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