Bilateral Trade between India and Bangladesh: A General Equilibrium Approach

Chandrima Sikdar, Thijs ten Raa, Pierre Mohnen and Debesh Chakraborty

Chapter 25 in Input–Output Economics: Theory and Applications:Featuring Asian Economies, 2009, pp 487-518 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractIndia and Bangladesh pursued policies of trade liberalization since the early 1990s. However, due to the differential speeds of opening up, Bangladesh's bilateral trade deficit with India widened substantially over the years. This aggravated the economic and the political tensions between the economies. It has been held that the promotion of free trade between the two economies may enhance trade and hence economic cooperation between them. Against this backdrop, the present chapter proposes a theoretical framework which provides a general equilibrium determination of the commodity pattern of trade and hence locates the comparative advantages of the economies. The empirical implementation of the model considers trade in 25 sectors comparable in the input–output tables of the economies. The study isolates the gains from free trade accruing to either economy. The chapter also explores the pattern of bilateral trade when each economy produces goods by utilizing their own, as well as the other country's technology. The gains from this trading arrangement are also isolated.

Keywords: Input–Output Analysis; National Accounts; Productivity; Performance; Canadian Economy; Chinese Economy; Indian Economy; Asian Economics (search for similar items in EconPapers)
Date: 2009
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Journal Article: Bilateral trade between India and Bangladesh: A general equilibrium approach (2006)
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