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India’s trade with South and Central Asia: an application of institution-based augmented gravity model

Author

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  • Suadat Hussain Wani

    (Indian Council of Social Science Research (ICSSR))

  • Effat Yasmin

    (University of Kashmir)

Abstract

The present study investigates the effect of regional and bilateral trade agreements supported by institutional framework on bilateral trade between India and selected South and Central Asian countries. The augmented gravity model that corrects for zero trade, endogeneity and heterogeneity is used. The model is developed by applying OLS and PPML (Poisson pseudo-maximum likelihood) estimation technique using panel dataset of 22 countries from 1996 to 2020. Empirical results show that trade agreements have failed to enhance trade between selected countries. However, institutional framework positively contributes to trade integration among these countries. The key finding of this study is that regional trade agreements supported by institutional framework play an important role in promotion of trade among these countries. Thus, the government needs to pay attention to enhance institutional quality to reap the benefits of trade integration.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:futbus:v:9:y:2023:i:1:d:10.1186_s43093-023-00257-6
    DOI: 10.1186/s43093-023-00257-6
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    More about this item

    Keywords

    Regional integration; Gravity model; Institutional framework; Panel data; South Asia;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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