FROM SAPTA TO SAFTA: The Trade Patterns within the SAARC Region


This study aims to highlight the impact of SAPTA and SAFTA on trade in the SSARC region. Fixed effects gravity model is estimated to cope with the unobserved heterogeneity that are country and time specific. The Poisson estimator is used to estimate the gravity model which deals with the inbuilt heteroskedasticity due to zeros in trade data. Results of the estimated elasticities show about 60 per cent, 50 per cent and 10 per cent increase in trade volume due to SAPTA, SAFTA and other trade agreements, respectively in the SAARC region.

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