Opening Up Markets to Neighbors : Gains for Smaller Countries in South Asia
The South Asia Free Trade Area (SAFTA) came into effect in 2006, but free and unfettered trade is still a work in progress. Drawing from theory and evidence, this note looks at how all countries, especially the smaller ones, can gain from mutual trade liberalization. Consumers, exporters, and producers, the three key players in this debate, all stand to gain from multilateral trade. Consumers enjoy lower prices, more product variety, and better quality goods. Exporters obtain access to much larger markets and sourcing opportunities for key inputs. Producers are incentivized to become more efficient, increase their sizes and scales via access to a bigger market, gain cheaper and higher quality inputs, and receive more foreign direct investment (FDI). As an example of how smaller South Asian nations can reap significant benefits, the US-Mexican asymmetry case study is presented, demonstrating how Mexico rose to become the world's thirteenth largest economy after joining NAFTA. Given that the South Asia region is in the process of making SAFTA effective, nations that hold out from the process could suffer by being "innocent bystanders," which is a welfare loss faced by a country that does not fully participate in a regional agreement being created around it.
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Bibliographic Details
| Main Authors: |
Kathuria, Sanjay,
Shahid, Sohaib |
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| Format: | Brief
biblioteca
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| Language: | en_US |
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| Published: |
World Bank, Washington, DC
2015-01
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| Subjects: | apparel,
apparel exports,
bilateral Free Trade Agreement,
Bilateral trade,
capital markets,
Common Market,
competitiveness,
consumer goods,
Consumers,
cost reduction,
cross-border issues,
Currency,
customs,
customs union,
decision making,
developed countries,
Development Economics,
economic cooperation,
export growth,
export markets,
export products,
exporters,
exports,
Federal Reserve,
Federal Reserve Bank,
foreign capital,
foreign competition,
foreign direct investment,
Free Trade,
free trade agreements,
Free Trade Area,
free trade zones,
GDP,
growth rate,
impact of trade,
impact of trade reforms,
import tariffs,
imports,
industry trade,
International economics,
international telecommunications,
LDCs,
manufacturing industries,
Market size,
mutual trade,
new markets,
new products,
non-tariff barriers,
per capita income,
policy makers,
Policy Research,
political economy,
productivity,
productivity growth,
protectionist,
real income,
regional integration,
small countries,
small country,
small economies,
sourcing,
sunset clauses,
tariff barriers,
tariff concessions,
tariff reduction,
Trade Agreement,
trade barriers,
trade concessions,
trade liberalization,
trade openness,
trade patterns,
trade policy,
trade reform,
trade reforms,
unemployment,
unilateral tariff reduction,
value added,
welfare loss, |
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| Online Access: | http://hdl.handle.net/10986/21407
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