Trade Policy Reforms in South Asia and Australia-South Asia Trade: Intensities and Complementarities

Abstract

Although trade between Australia and the SAARC region has been quite low, it has been growing in recent years with progressive trade liberalization in Australia as well as in the SAARC region, but the potential for further expansion has not been extensively explored. The objective of this article is to analyze trade flows between Australia and SAARC countries using trade intensity index and the revealed comparative advantage index (RCA) to identify potential areas for further expansion of Australia's trade into the region. Our analysis of trade flows also demonstrates that there is a high level of trade complementarity between Australia and member countries of SAARC. This study reveals that there is an untapped potential for Australia to increase its exports to South Asia, based on these com plementarities.