Deeper Trade Integration among South Asian and Southeast Asian Regions
- Economic & Political Weekly
- 60(23), Jun 14, 2025: p.49-56
The possibility of deeper trade integration among South Asian and Southeast Asian nations is examined using a general equilibrium analysis. By relaxing the full employment assumption in the standard Global Trade Analysis Project model, the possibility of meaningful regional welfare gains through trade integration is explored. Two simulation scenarios indicate promising positive welfare effects and improved terms of trade, particularly benefiting the manufacturing sector in South Asia and the extraction and processed food sector in SEA. This provides solutions to the long-held issues of a relatively stagnant manufacturing sector. The welfare ecomposition of the simulations indicates that the gains to the endowments are more significant than the gains in allocative efficiency, suggesting that the natural resources are utilised more efficiently for regional integration. - Reproduced