South Asian Free Trade Area: Implications for Bangladesh

Abstract

The current thesis has analyzed the impact of South Asian Free Trade Area (SAFTA) on Bangladesh in terms of export generation within member countries. A standard gravity model has been used to analyze Bangladesh’s export potential using cross section data. From the estimated result, it is observed that Bangladesh has huge export potential to South Asia in general, and India in particular. If SAFTA agreement is properly implemented then Bangladesh’s exports within this region would be much higher than the estimated potential export. In terms of imports, Bangladesh has exceeded its potential level. Therefore, the expected increase in import by Bangladesh from SAFTA member countries might not be as large as the expected increase in export. But it should be mentioned that the expected results can only be achieved by free trade in real sense i.e. goods and services can move freely across countries without any tariff and non-tariff barriers.SAFTA, Gravity Model, Bangladesh’s Export Potential