Economic impact of the proposed Bangladesh–India FTA: potentials and realities
South Asian Journal of Global Business Research
ISSN: 2045-4457
Article publication date: 29 July 2014
Abstract
Purpose
The purpose of this paper is to investigate the potential economic effects of the proposed Bangladesh-India free trade agreement (FTA).
Design/methodology/approach
The authors have used the computable general equilibrium (CGE) analysis of Global Trade Analysis Project (GTAP) database. The analysis highlights the possible costs and benefits of the two nations within three different scenarios. Under Scenario I all bilateral import tariffs between Bangladesh and India are removed; Scenario II represents the setting where Bangladesh cuts its all tariffs by 75 and in Scenario III Bangladesh cuts tariffs by 50 percent. India cuts all their tariffs by 100 percent in all three scenarios.
Findings
The findings indicate that India may gain more in terms of welfare and real GDP via the improved terms of trade while Bangladesh is going to have welfare loss, but if Bangladesh is able to make a preferential FTA like Scenario III with India its welfare, real GDP and exports will be increased substantially.
Originality/value
This paper is the first-ever attempt to estimate the effect of the proposed Bangladesh-India FTA using CGE analysis of GTAP database version 7.
Keywords
Acknowledgements
JEL Classifications — F10, F15, F17
This research work was supported by the Hankuk University of Foreign Studies Research Fund of 2013, Seoul, Korea.
Citation
Kim, C., Masudur Rahman, M. and Arjuman Ara, L. (2014), "Economic impact of the proposed Bangladesh–India FTA: potentials and realities", South Asian Journal of Global Business Research, Vol. 3 No. 2, pp. 135-153. https://doi.org/10.1108/SAJGBR-04-2012-0049
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited