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Effects of ASEAN-India Free Trade Agreement on agricultural trade: The gravity model approach

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  • Jagdambe, Subhash
  • Kannan, Elumalai
Abstract
This paper analyses the trade creation and trade diversion effect of ASEAN-India Free Trade Agreement (AIFTA) on agricultural trade among the member countries. Data on 50 countries with five major FTAs for the period 2005–2014 were used. Gravity model by ordinary least square and Poisson Pseudo-Maximum Likelihood (PPML) methods was estimated. The PPML method corrects the problem of zero trade and heteroscedasticity in the regression model. Analysis shows a pure trade creation effect of AIFTA, MERCOSUR, and EU-15 in the time fixed effect model. Under the time and country fixed effect model, AIFTA, SAPTA, and NAFTA have stronger trade creation effect than trade diversion effect. These results suggest that agricultural sector can be pushed for further trade liberalisation in the FTAs.

Suggested Citation

  • Jagdambe, Subhash & Kannan, Elumalai, 2020. "Effects of ASEAN-India Free Trade Agreement on agricultural trade: The gravity model approach," World Development Perspectives, Elsevier, vol. 19(C).
    • Handle: RePEc:eee:wodepe:v:19:y:2020:i:c:s2452292918301668
    DOI: 10.1016/j.wdp.2020.100212
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    2. Saba GULNAZ & Hemlata MANGLANI, 2022. "Does gravity work in the context of India and ASEAN bilateral trade? An application of the FGLS method," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(630), S), pages 143-160, Spring.
    3. Cerqua, Augusto & Montalbano, Pierluigi & Temerbulatova, Zhansaya, 2024. "A decade of Eurasian integration: An ex-post non-parametric assessment of the Eurasian economic union," International Economics, Elsevier, vol. 178(C).
    4. Yuee Li & Jingdong Li, 2021. "How Does China’s Economic Policy Uncertainty Affect the Sustainability of Its Net Grain Imports?," Sustainability, MDPI, vol. 13(12), pages 1-21, June.
    5. Christiana Manu, 2021. "The Impact of Trade Agreement on Agricultural Trade Flow in West Africa," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(1), pages 1-89, January.
    6. Tamás Mizik & Ákos Szerletics & Attila Jámbor, 2020. "Agri-Food Export Competitiveness of the ASEAN Countries," Sustainability, MDPI, vol. 12(23), pages 1-15, November.
    7. Muhamad Rias K. V. Zainuddin & Tamat Sarmidi & Norlin Khalid, 2020. "Sustainable Production, Non-Tariff Measures, and Trade Performance in RCEP Countries," Sustainability, MDPI, vol. 12(23), pages 1-12, November.

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    More about this item

    Keywords

    Agricultural trade; Free trade agreement; AIFTA; India; ASEAN;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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