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Economic co-operation in South Asia: The Dilemma of SAFTA and beyond

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  • A. Ganesh Kumar

    () (Indira Gandhi Institute of Devleopment Research)

  • Gordhan Kumar Saini

    () (Indian Institute of Management, Ahmedabad)

Abstract

This paper attempts to evaluate the Pareto optimality of SAFTA for all the member states. Besides, the welfare optimality of three other alternative sets of coordinated trade policies that go beyond SAFTA has also been studied here. These include (a) extended preferential trading between SAFTA and three other major trading blocs (ASEAN, NAFTA and EU27), (b) coordinated full trade liberalisation (carried out unilaterally or as part of a multilateral agreement) by South Asian countries, and (c) SAFTA plus a customs union (two variants with 5 and 10 CET). The analysis, using the standard static GTAP model, shows that the welfare basis for establishing SAFTA or for deeper trade policy coordination is not very strong. Nor is it obvious that cooperation among the South Asia would be forthcoming given the anticipated welfare impacts.

Suggested Citation

  • A. Ganesh Kumar & Gordhan Kumar Saini, 2007. "Economic co-operation in South Asia: The Dilemma of SAFTA and beyond," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2007-017, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2007-017
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    References listed on IDEAS

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    9. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
    10. M. Akhlaqur Rahman & Ayubur Rahman Bhuyan & Sadrel Reza, 1981. "The Trade Effects of a South Asian Customs Union. An Expository Study," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 20(1), pages 61-80.
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    Cited by:

    1. Narayanan, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models," Economic Modelling, Elsevier, vol. 27(3), pages 755-766, May.
    2. Narayanan, Badri & Thomas Hertel & Mark Horridge, 2010. "Linking Partial and General Equilibrium Models: A GTAP Application Using TASTE," GTAP Technical Papers 3192, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Gordhan K. Saini, 2009. "Non-tariff measures and Indian textiles and clothing exports," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2009-002, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Mamoon, Dawood & Paracha, Sohail & Mughal, Hammad & Ayesha, Anam, 2011. "Pakistan's trade competitiveness & complementarities in South Asia," MPRA Paper 31369, University Library of Munich, Germany.

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