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Theoretical and Applied Economics
No. 4 / 2020 (625), Winter

Testifying the role of regulatory environment in trade facilitation: Impact on intra-regional trade in South-Asia

Tanya GANDHI
Jamia Millia Islamia, New Delhi, India
Shahid AHMED
Jamia Millia Islamia, New Delhi, India

Abstract. The intraregional trade in South-Asia region is only 6.1 percent of its total trade due to a number of factors, including Regulatory environment governing international trade. This study examines the impact of trade facilitation in Regulatory environment on bilateral exports within the region. A panel gravity model augmented with a self-composed index for Regulatory environment for both exporting and importing countries in South-Asia is estimated. It reveals that enhanced regulatory environment of importing country impacts intra-regional trade positively whereas, that of the exporting country impacts the same negatively. The estimates of trade potential within the region are significantly encouraging. The simulations’ results reveal that by making collective efforts in trade facilitation in regulatory environment, the intra-regional exports could increase tremendously in a range of scenarios which could not be achieved even by phasing out of tariffs within the region.

Keywords: trade facilitation; regulations; South-Asia; augmented panel gravity model; trade potential; simulations.

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