A Trade Linkage System for Saarc

Abstract

The significant success, which has made through regional economic co-operation in different parts of the world like EC, NAFTA, LAFTA, ASEAN and so on, are reflected in the initiatives that emerged in South Asia in the mid-eighties through formation of South Asian Association for Regional Cooperation (SAARC) in 1985. In the 12th SAARC summit, held in Islamabad in 2004, the SAARC member countries have decided to establish South Asian Free Trade Area (SAFTA). Macro-econometric models have been used, in general, extensively in recent years not only for forecasting purposes but also to analyze the effects of certain policy measures on the economy. It has been usual practice to construct macro-models for respective countries without specifying any specific linkages with trading partners. It is the econometric trade link system, through which we can study individual economy focusing the aspect of economic interdependence among member countries. The main objective of this paper is to construct a suitable trade linkage system for SAARC. This paper also presents the impact of SAFTA on member countries. Further, the trade relation with non-SAARC countries has also been studied in this paper.

Structural Stability of India's Export Demand Function

“…Instead, we employ world import demand as a scale variable in our model (Winter 1984). The basic idea stems from the world link model where it is assumed that only the allocation decision of world imports has to be made according to sources of supply (Sarkar 2004). Another difference of the model is the treatment of price variables in absolute term, instead of relative term.…”