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Regional Integration in South Asia: An Analysis of Trade Flows Using the Gravity Model

Author

Listed:
  • Naseem Akhter

    (Pakistan Institute of Development Economics, Islamabad)

  • Ejaz Ghani

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

The study deals with trade benefits from the free trade agreement of the SAARC countries. It assesses the trade potential and trade creation with member and non-member countries. The gravity model has been used to measure the bilateral trade flows and to assess the trade effect for member and non-member countries. Two analyses estimate the gravity model. The first analysis is based on cross-sectional data to capture the trade effect individually each year; and the second analysis utilises the pooled data to measure the overall trade effects and trade flows for the period 2003 to 2008. The results from the two approaches show that estimated coefficients are consistent with the model assumptions. Both analyses show that the regional trade agreement of the SAARC countries could divert the trade for member countries as well as for the non-member countries. However, trade volume will increase only if the major partners (Pakistan, India, and Sri Lanka) sign regional trade agreements.

Suggested Citation

  • 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.
    • Handle: RePEc:pid:journl:v:49:y:2010:i:2:p:105-118
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    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume2/105-118.pdf
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    Citations

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    Cited by:

    1. Renjini, V.R. & Kar, A. & Jha, G.K. & Kumar, P. & Burman, R.R. & Praveen, K.V., 2017. "Agricultural Trade Potential between India and ASEAN: An Application of Gravity Model," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 30(1), June.
    2. Suhas Jadhav & Ishita Ghosh, 2024. "Future Prospects of the Gravity Model of Trade: A Bibliometric Review (1993–2021)," Foreign Trade Review, , vol. 59(1), pages 26-61, February.
    3. Saba GULNAZ & Hemlata MANGLANI, 2022. "Does gravity work in the context of India and ASEAN bilateral trade? An application of the FGLS method," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(630), S), pages 143-160, Spring.
    4. Farhat Mahmood & Juthathip Jongwanich, 2018. "Export-enhancing Effects of Free Trade Agreements in South Asia," Journal of South Asian Development, , vol. 13(1), pages 24-53, April.
    5. Lubna NAZ* & Naeem-uz-ZAFAR** & Mohsin Hasnain AHMAD***, 2019. "THE IMPACT OF PREFERENTIAL TRADE AGREEMENTS ON SOUTH ASIAN EXPORT FLOWS: Using Matching Econometrics," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 29(2), pages 243-264.
    6. Sultan, Maryam & Munir, Kashif, 2015. "Export, Import and Total Trade Potential of Pakistan: A Gravity Model Approach," MPRA Paper 66621, University Library of Munich, Germany.
    7. Suadat Hussain Wani & Effat Yasmin, 2023. "India’s trade with South and Central Asia: an application of institution-based augmented gravity model," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.
    8. Gulzar Ali & Zhaohua Li, 2017. "An Empirical Investigation on the Role of exports, imports and its Determinants in Foreign Trade of Pakistan," Information Management and Business Review, AMH International, vol. 8(6), pages 39-58.
    9. Shujaat Abbas, 2018. "Free Trade Agreements and International Trade Flow of Pakistan: the Gravity Modelling Approach," Journal Global Policy and Governance, Transition Academia Press, vol. 7(2), pages 71-84.
    10. 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.
    11. Taguchi, Hiroyuki, 2018. "Trade impacts of South Asian Free Trade Agreements: The case of Sri Lanka," MPRA Paper 85238, University Library of Munich, Germany.
    12. Shujaat Abbas & Abdul Waheed, 2019. "Pakistan’s Global Trade Potential: A Gravity Model Approach," Global Business Review, International Management Institute, vol. 20(6), pages 1361-1371, December.
    13. Adnan Akram & Ejaz Ghani & Musleh Ud Din, 2020. "Strengthening Pakistan’s Trade Linkages: A Case Study of Regional Comprehensive Economic Partnership (RCEP)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(3), pages 399-417.
    14. Saima Nawaz, 2020. "Institutions, Regional Integration and Bilateral Trade in South Asia: PPML Based Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 221-242.
    15. Salahuddin & Javed Iqbal & Misbah Nosheen, 2020. "Economic & Cultural Distance & Regional Integration: Evidence from Gravity Model Using Disaggregated Data for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 243-274.
    16. Hiroyuki Taguchi & Don Chalani Imasha Rubasinghe, 2019. "Trade Impacts of South Asian Free Trade Agreements in Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 1-18, March.
    17. Kis, Katalin, 2017. "A Kelet-afrikai Közösség belső kereskedelmére ható tényezők [Factors determining the intra-regional trade of the East African Community]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 943-969.
    18. Tehseen Ahmed Qureshi & Anwar Shah, 2020. "Trade Agreements and Export Creation: An Empirical Analysis of Pakistan’s Exports at Industry Level," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 25(2), pages 93-118, July-Dec.

    More about this item

    Keywords

    Trade; Regional Integration; Gravity Model;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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