Fulfilling the Promises of South Asian Integration: A Gravity Estimation

This paper examines the determinants and trade effects of the South Asian Preferential Trading Arrangement (SAPTA) using empirical methods. An empirical specification of the gravity model is developed to analyze the determinants of trade flows for the South Asian Free Trade Area (SAFTA) countries. The need for maintaining the primacy of economic integration in the region’s growth and development processes is highlighted. The paper argues that the recent success in the growth performance of the South Asian countries offers prospects as well as challenges for deeper integration into the global economy. Integration under the SAFTA is, the author argues, the first step in that direction.