A South Asian Preferential Trading Arrangement: Implications for Regional Trade in Food Commodities

Abstract

As regionalism is regaining its momentum in different parts of the world, South Asian countries are becoming increasingly interested in regional inte gration to achieve expanded trade and economic growth in the region. This study attempts to analyze the implications of a South Asian Preferential Trad ing Arrangement (SAPTA) for expanded trade in food commodities. The import and export intensity indices for food commodities suggest many strong trade linkages between different South Asian countries. Using a partial equi librium model, the ex-ante trade creation and trade diversion effects of a SAPTA are computed for food commodities. The results indicate that SAPTA would yield a considerable trade expansion in the region and would be welfare improving for all the South Asian countries. (JEL Classification: F15, F17, Fl) * Correspondence Address: International Food Policy Research Institute, 1200 17th Street, N.W., Washington, D.C. 20036, U.S.A., Tel.: (202) 862-5625, Fax: (202) 467 4439; The financial assistance provided by the World Bank through its McNamara fellowships program is gratefully acknowledged. The helpful comments provided by Dean DeRosa and other colleagues at the International Food Policy Research Insti tute (IFPRI), and an anonymous reviewer are acknowledged. Any remaining errors, however, are solely mine. The views expressed are solely on my own and do not reflect those of World Bank or IFPRI. ©1996 Institute for International Economics, Sejong Institution. All rights reserved. This content downloaded from 157.55.39.207 on Tue, 05 Jul 2016 05:42:41 UTC All use subject to http://about.jstor.org/terms Kumaresan Govindan 479