Real Exchange Rates and International Competitiveness of SAAR Countries: An Analysis of Bangladesh, India, Pakistan and Sri-Lanka for 1960-2000 (original) (raw)

Trade Reforms and Economic Integration in South Asia: SAARC to SAPTA

Applied Econometrics and International Development

As Globalisation and regionalism gained its momentum from the beginning of 1980s and the gain from open trade is realised by the pioneer East Asian nations (especially, the ASEAN countries), the South Asian countries also tried to catch up with the stream under the banner of South Asian Association of Regional Cooperation (SAARC). The objective of the study is to assess the liberalisation efforts by these nations. Our empirical results in terms of trade among the regional group suggest that the smaller countries, namely Bangladesh and Sri Lanka reap the higher gains from openness, whereas trade with other international partners, it took India and Bangladesh to gain international competitiveness until mid 1990s. Our study indicates Pakistan and Sri Lanka's trade liberalisation efforts don't seem to have much positive impact in terms of international trade.

Real Effective Exchange Rate and Export Performance: The Case of Sri Lanka

Staff Studies

This study examines the determinants of manufacturing exports of Sri Lanka with specific emphasis on the impact of the real effective exchange rate (REER). The hypothesis that persistent appreciation of the REER has negative implications on exports, when other determinants of manufacturing exports remain constant, is tested using the reduced form of the export equation with annual data for the period 1970-2014.The export equation is estimated using the Autoregressive Distributed Lag (ARDL) method. The results suggest that the REER is a key determinant of export performance of Sri Lanka. The world demand is also a contributory factor. If Sri Lanka takes corrective macroeconomic policy measures to maintain the REER at a realistic (market consistent) level and to cater to the upper income markets by improving the quality of products and linking with global supply chain networks, it would enable Sri Lanka to secure international competitiveness.

REAL Effective Exchange Rate, Revealed Comparative Advantage and Global Trade Potential of Pakistan

Indian Journal of Economics and Business, 2021

One of the key objectives of this research is to assess Pakistan trade potential based on panel data of 47 nations for the period 1995-2020. The Gravity model's short coefficients and Bound Cointegration long run are then used to determine a country's global trade potential among Low, Middle, and High Income Countries. Panel estimation has several benefits over cross section and time series data because it accounts for individual variation. The findings of cross-section and time-series studies that are not controlled for heterogeneity may consider skewed. Panel data, on the other hand, have greater variability, more degrees of freedom, and less multicollinearity across the explanatory factors, resulting in a higher estimate of econometric efficiency. Despite the fact that all three variables are statistically significant and have the expected signs, the GDP coefficient is substantially less than in the original model i.e., in the absence of per capita GDP. The rationale is self-evident. Between the explanatory variables, Gross Domestic Product and GDP per capita, Distance, Population and real effective exchange rate. The estimated results revealed from Gravity Model that overall regression specification in short run is robust and estimated coefficients are not spurious. Moreover, the long run coefficients are convergence in all cases and meaningful association observed among these nations with bilateral trade activities in Pakistan.

Trade Pattern in SAARC Countries: Emerging Trends and Issues

2010

Focusing on the analysis of South Asia Association for Regional Co-operation (SAARC) trade, the paper attempts to analyse the merchandise trade performance of SAARC region and also the trend in intra-SAARC trade. A brief analysis of trade baskets of SAARC countries shows that export baskets of major SAARC countries are signifi cantly similar refl ecting that they may be competing with one another in same industries in the international market. However, export baskets are relatively more diversifi ed for India and Pakistan. Grubel-Lloyd index provides an empirical evidence of growing intra-industry trade in SAARC countries which perhaps is an off-shoot of trade and industry reforms that have taken place in recent years. An attempt is also made to examine SAARC region’s relative competitiveness by calculating revealed comparative advantage index [as suggested by Balassa (1965)] and compare the structure of specialisation using relative trade comparative advantage (RTA) index [as sugge...

Comparative Advantage of International Trade of Sri Lanka in the SAARC Region

The main objective of this study is to evaluate regional competitiveness of international trade in commodities of Sri Lanka to enhance trade strategies through mutual trade agreements. In addition to that the paper focuses to build alternative trade opportunities among the member countries. Revealed Symmetric Comparative Advantage (RSCA) indices used to identify the trade patterns in the sectors in which an economy has a comparative advantage, by comparing the country of interests’ trade profile with the world average. Trade Balance Index (TBI) is employed to analyze whether a country has specialization in export (as net-exporter) or in import (as net-importer) for a specific group of products. The research study is based on data on exports and imports statistics published by the United Nations Commodity Trade Statistics Database (UN-COMTRADE) and the research time frame is eleven years from 2006 to 2011. According to the findings of the paper comparative advantage of SAARC countries centered on common products and most of the products are primary and secondary products. Therefore the paper concluded that based on the current situation of the SAARC countries, they are trade competitors and mutual trade agreements among the countries will leads to export market distortion, harming welfare of the region. However the conclusion will provide strategic direction for fast growing counties like India and Sri Lanka, to target potential market opportunities in long term trade strategies within the region.

The Economic Performance of SAARC Member Countries

Research on Humanities and Social Sciences, 2013

This paper attempts to examine the impact of trade liberalization over the macro economic structure of four SAARC member countries-Pakistan, India, Bangladesh and Srilanka during1985 to 2006. The data set consists of a 21 years (1985-2006) time series data of trade variables of four countries of SAARC named as Pakistan, India, Bangladesh and Srilanka. The data provides the substantial evidence, which shows the benefits of intra regional trade expansion: larger markets and fuller utilization of production capabilities, transfer of suitable production technologies, comparative advantage and complementarities, economies of scale due to expanded markets and better utilization of entrepreneurial capabilities, capital, manpower and natural resources. In addition to that such an arrangement is also expected to foster closer economic ties among member countries and enhance their bargaining power with respect to other countries and economic blocs.

New empirical assessment of export price competitiveness: Industry-specific real effective exchange rates in Asia

The North American Journal of Economics and Finance, 2020

This study constructs a monthly series of industry-specific real effective exchange rates (I-REERs) based on the producer price indices of nine Asian economies from 2001 to 2014. To check the usefulness of the I-REERs as a measurement of international price competitiveness, we calculated the aggregated I-REER (Avg-I-REER) and compared it with the REER published by the Bank for International Settlements (BIS-REER). We found that in some Asian economies, the Avg-I-REER exhibited different movements from the BIS-REER due to the differences in the underlying prices and weights used for the data construction. We also conducted a panel analysis to investigate the effect of both the Avg-I-REER and BIS-REER on real exports in the nine Asian economies. It was revealed that an appreciation of the Avg-I-REER has a negative and significant impact on real exports, whereas that of the BIS-REER has a positive and insignificant influence on real exports. Even the "aggregated" I-REER shows a greater advantage when used for measuring the export price competitiveness relative to the conventional REERs.

Exchange Rate, Competitiveness and Balance of Payment Performance

Staff Studies, 2009

This paper examines the effectiveness of exchange rate policy of Sri Lanka in achieving external competitiveness since liberalization of the economy in 1977. The conventional two-country trade model that explains the traditional approach to Balance of Payment (BOP) was applied using quarterly data covering the period of 1978:1 to 2000:4. Results reveal that the Real Effective Exchange Rate(REER) does not have significant impact on improving the Trade Balance (TB) particularly in the short run implying a blurred J-Curve phenomenon. Even though the cointegration tests reveal that there is a long run relationship between TB and the REER it shows very marginal impact in improving TB in long run. (JEL F40, O24)

Foreign Trade and Economic Reforms in South Asia

As the world economy has undergone through various changes so as the countries of South Asia (SA). After following growth retarding policies for a long period of time individual countries in the region have adopted various reform measures to encourage foreign trade. This paper examines various aspects of foreign trade in major South Asian countries namely Bangladesh, India, Pakistan and Sri Lanka. Basic trends of export and import in these countries are analyzed using recent data. A panel random effect estimation is conducted using a data set ranging from 1991 to 2012 to measure the impact of conomic liberalization reforms on foreign trade of SA. The empirical results of this study suggest positive and significant association between various liberalization refomrs and trade development for the countries. This study advances that most of the countries in SA need to broaden their export markets to reap maximum benefit from various refomr initiatives.

Exchange Rate and Foreign Trade: A Comparative Study of Major South Asian and South-East Asian Countries

Procedia - Social and Behavioral Sciences, 2016

The main purpose of this study is to examine the relationship of exchange rate with exports and imports of major South-Asian and Southeast Asian Economies. The Autoregressive Distributed Lag (ARDL) approach to co-integration and error correction model is employed to investigate the long run and short run relationship between the variables in sample economies over the period of 1979-2010. The results show that the long run relationship between exchange rate and exports exists in more than half of the sample countries; however, the relationship between exchange rate and imports is found only in one sample country. Moreover, the significant short run relationship between the variables is not found in majority of the sample countries.