5 - Gravity analysis of South Asia's free trade

Abstract

This chapter attempts to examine the prospects of regional trade among South Asian countries using the augmented gravity model. The gravity equations are estimated separately to examine the behavior of regional trade over time, i.e. one for panel data for the sample period 1999–2008, and another two for cross-section data for 1999 and 2008. Overall, the gravity model results are aligned with previous studies on South Asia’s regional trade; minor distinctions are not surprising given the differences in their sample periods and estimation procedure, and the specification of the augmented gravity equation.