Does the Role of Observer Countries in the Regional Trade Agreement matter for Intra-Regional Trade?

De Silva, Dakshina Garfield and Lee, Soon-Cheul (2018) Does the Role of Observer Countries in the Regional Trade Agreement matter for Intra-Regional Trade? Applied Economics, 50 (20). pp. 2219-2228. ISSN 0003-6846

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Abstract

This paper investigates the effects of trade by observed economies on the intra-regional trade by SAARC members using PPML gravity models with panel data over the period 2008-2014. Eight SAARC members and eight observed countries, including the EU, are analyzed in capturing the trade effect of observed economies on intra-regional trade in SAARC. This paper provides an empirical measure of observers’ trade, FDI and ODA with SAARC if the exports and imports of observers to/from SAARC have positive or negative signs for intra-regional exports and imports. The results show that the exports and imports of observers to SAARC members have positive effects on bilateral exports among the members. The FDI of observers reduces the bilateral intra imports in SAARC and ODA also has a negative effect on bilateral exports among the members. These results imply that the imports by SAARC members from observer countries increase intra-regional trade in the region. The FDI and ODA increase and decrease intra-regional trade in SAARC, respectively, implying that the policies for both FDI inflow from observers and efficient aid management are needed to increase regional welfare. The study also recommends that trade between SAARC members and its observers help to increase intra-regional trade in SAARC.

Item Type:
Journal Article
Journal or Publication Title:
Applied Economics
Additional Information:
This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 02/11/2017, available online: http://www.tandfonline.com/10.1080/00036846.2017.1392005
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
125045
Deposited By:
Deposited On:
09 May 2018 08:54
Refereed?:
Yes
Published?:
Published
Last Modified:
28 Nov 2020 04:59