Trade Reforms and Economic Integration in South Asia: SAARC to SAPTA

Abstract

As Globalisation and regionalism gained its momentum from the beginning of 1980s and the gain from open trade is realised by the pioneer East Asian nations (especially, the ASEAN countries), the South Asian countries also tried to catch up with the stream under the banner of South Asian Association of Regional Cooperation (SAARC). The objective of the study is to assess the liberalisation efforts by these nations. Our empirical results in terms of trade among the regional group suggest that the smaller countries, namely Bangladesh and Sri Lanka reap the higher gains from openness, whereas trade with other international partners, it took India and Bangladesh to gain international competitiveness until mid 1990s. Our study indicates Pakistan and Sri Lanka's trade liberalisation efforts don't seem to have much positive impact in terms of international trade.

Keywords: South Asia, SAARC, SAPTA, SAFTA, Trading Bloc, Intra- and International Competitiveness, Real eschange rate, Opennes in trade regime

JEL Classification: F10, F47