India-MERCOSUR Preferential Trade Agreement: An Ex-Post Evaluation under Modern Gravity Framework

Kumari Mamta ()
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Kumari Mamta: Alliance University, Bengaluru, Karnataka, India, Postal: Assistant Professor, Department of Economics, Faculty of Humanities, Liberal Arts and Social Sciences, Alliance University, Chikkahagade Cross, Chandapura-Anekal Main Road, Anekal, Bengaluru -562 106, Karnataka, India.

Journal of Economic Integration, 2025, vol. 40, issue 2, 367-390

Abstract: Against the backdrop of expanding the tariff concession list of 450 products to 1500-2000 under India - Southern Common Market Preferential Trade Agreement (India-MERCOSUR PTA), the study analyses the effects of the India-MERCOSUR PTA on the trade flows of member states. The study employs structural gravity model framework to estimate total bilateral, unilateral, and heterogenous trade effects of this PTA. The results indicate that bilateral trade between India and MERCOSUR countries have increased by 63% at the expense of trade diversion from domestic sales. The study also provides evidence that PTA significantly increased India’s trade with non-MERCOSUR countries by 90%. In addition, the hypothesis of heterogeneity effects of PTA across each of its member countries and the direction of trade is confirmed by the estimates. Such empirical evidence of large average impacts on goods trade gives significant boost to the ongoing negotiations for further deepening the existing trade agreement.

Keywords: Gravity Model; Unilateral Effects; Trade Integration; India; MERCOSUR; Panel Data (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0948

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