Mega External Preferential Trade Agreements and Their Impacts on Indian Economy

Anand Ganesh-Kumar and Tirtha Chatterjee

Foreign Trade Review, 2016, vol. 51, issue 1, 46-80

Abstract: This study examines the impacts on India of three mega external preferential trading agreements (PTAs) from which the country is excluded using the Global Trade Analysis Project (GTAP) model combined with POVCAL poverty analysis tool. The simulation results show that each of these PTAs cause considerable trade diversion. However, the impacts on India’s trade flows, domestic output, returns to factors, aggregate welfare, inequality and poverty levels are rather small. In contrast, multilateral trade liberalization has significantly large and favourable impacts on all these variables. In particular, welfare improves by 1.7 per cent of GDP, inequality falls by over half percentage point and poverty head count lowers by 12.3 per cent over base levels under a multilateral free trade scenario. These results suggest that the country should continue with its efforts for achieving a multilateral trade agreement. At the same time, the country should hedge against the possibility that a global trade agreement does not materialize. One way to protect the country’s interest is to aggressively pursue preferential trading arrangements in parallel with key members of these three mega PTAs. This is likely to ensure that the country does not lose market share due to preference erosion.

Keywords: Trade policy; preferential trade agreements; poverty; computable general equilibrium (search for similar items in EconPapers)
JEL-codes: D58 F13 I31 O24 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0015732515616545 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:51:y:2016:i:1:p:46-80

DOI: 10.1177/0015732515616545

Access Statistics for this article

More articles in Foreign Trade Review
Bibliographic data for series maintained by SAGE Publications ().