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An Analysis of the Impact of Indo-Lanka Free Trade Agreement and Its Implications for Free Trade in South Asia

Author

Listed:
  • Siriwardana, Mahinda

    (University of New England)

Abstract

The Indo-Lanka Free Trade Agreement (ILFTA) which was signed in December 1998 between India and Sri Lanka has shown a promising start to trade liberalisation among SAARC (South Asian Association for Regional Cooperation) countries. This paper provides a quantitative assessment of the likely impact of the ILFTA. We perform simulations using the Global Trade Analysis Project (GTAP) model to quantify the impact of liberlised trade between Sri Lanka and India. GTAP is a computable general equilibrium (CGE) model of the world economy. Using the model simulations, the paper also examines the implications of extending the free trade agreement to other SAARC nations. Results indicate that both Sri Lanka and India will experience some welfare gains from ILFTA. The extension of such trade agreement to all SAARC nations may create significant welfare improvements in Sri Lanka.

Suggested Citation

  • Siriwardana, Mahinda, 2004. "An Analysis of the Impact of Indo-Lanka Free Trade Agreement and Its Implications for Free Trade in South Asia," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 568-589.
    • Handle: RePEc:ris:integr:0299
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    Citations

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    Cited by:

    1. Mahinda Siriwardana, 2006. "Australia's Involvement in Free Trade Agreements: An Economic Evaluation," Global Economic Review, Taylor & Francis Journals, vol. 35(1), pages 3-20.
    2. Rakesh Kumar, 2021. "South Asia: Multilateral trade agreements and untapped regional trade integration," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2891-2903, April.
    3. Siriwardana, Mahinda, 2007. "The Australia-United States Free Trade Agreement: An economic evaluation," The North American Journal of Economics and Finance, Elsevier, vol. 18(1), pages 117-133, February.
    4. Jayatilleke S. Bandara & Wusheng Yu, 2012. "Non‐economic gains of Sri Lanka's FTAs with neighbours," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 39(10), pages 750-763, August.
    5. Lakatos, Csilla & Walmsley, Terrie, 2009. "Modeling cross-border investment in CGE: some alternatives and mechanisms," Conference papers 331838, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Varma, Anil, 2015. "ASEAN- India free trade agreement: an assessment of merchandise exports and imports," MPRA Paper 75035, University Library of Munich, Germany, revised 10 Nov 2016.
    7. Mahinda Siriwardana & Jinmei Yang, 2007. "Effects of Proposed Free Trade Agreement between India and Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 8(1), pages 21-38, January.
    8. Gabriel Mhonyera & Daniel Francois Meyer, 2023. "The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    9. Nugraheni, Reninta Dewi & Widodo, Tri, 2018. "The Impact of ASEAN’S FTAs with China, Japan, Korea and Australia-New Zealand: An Analysis in GTAP Framework," MPRA Paper 86693, University Library of Munich, Germany.

    More about this item

    Keywords

    Free Trade Agreement; General Equililorium; GTAP;
    All these keywords.

    JEL classification:

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

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