Impact of Trade Facilitation Reforms on The Trade Volume of SAARC Countries

Abstract

Purpose: The purpose of the study is to inform the ministry of commerce and trade about the significant implications of trade facilitation for the improvement of trade in the SAARC region. This paper attempts to estimate the relationship between trade facilitation indicators and trade volume and also explored the correlation between trade facilitation reforms and the trade volume in the case of SAARC countries. 
 Design/Methodology/Approach: This paper is an empirical approach, which is based on secondary data from SAARC countries for the period 2006 to 2013. The study uses Pooled OLS, Fixed effect, and a random effect model for the empirical analysis. 
 Findings: The results of the study show, that is a significant relationship between trade facilitation and trade volume. Decreasing the total number of documents required will make it possible for SAARC countries to trade with high frequency. The study also found that a marginal decrease in the total cost of trade also encourages traders to reach the targeted trade volume.
 Implications/Originality/Value: The trade facilitation reforms can be an effective policy option on the regional level across all the SAARC countries. However other policy reforms and actions such as basic physical infrastructure, good governance and insuring political stability are also obligatory for the possible improvement of the trading capabilities of SAARC countries.