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India’s Trade Potential and Free Trade Agreements: A Stochastic Frontier Gravity Approach

Author

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  • Surender Kumar

    (Department of Economics, Delhi School of Economics, University of Delhi, Delhi 110007, India)

  • Prerna Prabhakar

    (National Council of Applied Economic Research, New Delhi 11002, India)

Abstract

This paper analyses the role of Free Trade Agreements in determining export and import efficiency levels in India using stochastic frontier version of gravity model. We estimate the impact of selected FTAs of India (its bilateral FTAs, FTA with ASEAN and South Asian FTA) and regulatory quality on the efficiency of exports and imports over the period of 2000–2014. The results indicate that India’s bilateral FTAs and its FTA with the ASEAN group help in improving the export and import efficiency respectively. However, the South Asian Free Trade Agreement is statistically insignificant for India’s export and import efficiency. The results also highlight importance of trading partners’ regulatory quality for enhancing the India’s trade efficiency and note that the impacts of regulatory quality are non-monotonic.

Suggested Citation

  • Surender Kumar & Prerna Prabhakar, 2017. "India’s Trade Potential and Free Trade Agreements: A Stochastic Frontier Gravity Approach," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(1), pages 1-19, March.
    • Handle: RePEc:wsi:gejxxx:v:17:y:2017:i:01:n:gej-2016-0074
    DOI: 10.1515/GEJ-2016-0074
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    Cited by:

    1. Kiril I. Tochkov, 2018. "Trade Potential and Trade Integration of the Russian Far East: A Regional Perspective," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 21-38.
    2. Memduh Alper Demir & Mustafa Bilik & Utku Utkulu, 2017. "The Impact of Competitiveness on Trade Efficiency: The Asian Experience by Using the Stochastic Frontier Gravity Model," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(4), pages 1-15.
    3. Xu, Jiayue & Lu, Caiwu & Ruan, Shunling & Xiong, Neal N., 2022. "Estimating the efficiency and potential of China's steel products export to countries along the “Belt and Road” under interconnection: An application of extended stochastic frontier gravity model," Resources Policy, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    export and import potential; gravity equation; stochastic frontier; RTA; regulatory quality;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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