International Trade Working Paper

The International Trade Working Paper series promptly documents and disseminates reviews, analytical work and think-pieces to facilitate the exchange of ideas and to stimulate debates and discussions on issues that are of interest to developing countries in general and Commonwealth members in particular. The issues considered in the papers may be evolving in nature, leading to further work and refinement at a later stage.


Revisiting South Asian Integration

Trade Flows and Implied Distances Between Members

The paper undertakes the estimation of two alternative indicators of integration—potential trade and trade distance—by estimating the Global Gravity Model, consisting a panel data of nearly 100 largest trading partners of the world and 12–years period during 2002–13. Empirical results show that South Asia utilizes only 14 per cent of its intra-regional trade potential. Considering the global experience, this would indicate that implied average distance between South Asian trading pairs is 3,240 km, significantly higher than the actual geographical weighted distance of 1,872 km. Two pairs—India-Pakistan and India-Bangladesh—are found to be majorly responsible for low integration in South Asia.


Keywords: liberalisation, intra-regional trade, South Asia, integration
JEL: F15: International Economics / Trade / Economic Integration
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