Abstract
The article looks at the impact of preference, given under the bilateral free trade agreements Sri Lanka has signed with India and Pakistan. The focus here is on the export side and away from the import angle. This article identifies where the greatest preferences are offered to Sri Lanka-based exporters and analyzes the relationship between preferences and the export outturn. Preferences are calculated incorporating the current levels of protection in India and Pakistan. The article argues that successful Sri Lankan exporters’ penetration of the large Indian market, as reflected by the doubling of total exports over 2003–05, actually reflects a very concentrated increase in exports of a few products. Controlling for industry effects, preferences do not have a statistically significant impact on exporting to India.
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