Foreign Trade and Economic Reforms in South Asia

Abstract

After suffering from long lasting economic stagnation until the end of 1980s, individual SA countries started to embrace new growth-stimulating policy reforms through gradual opening up of their economies to the world. Following the already advanced East Asian example, these countries have adopted an export-led growth model that focuses on selling various final goods in the overseas markets, especially in the US and Europe. Through these initiatives, they are trying to bring dynamism to their economies. After a long period of struggling with economic stagnation, these countries got an access to large markets of the developed world and very recently they started to exploit their economies of scale. Furthermore, now-a-days, liberalization of trade started to boost growth of the productive sectors in these countries. The purpose of this paper is to trace the trends and patterns of international trade in four South Asian countries namely Bangladesh, India, Pakistan and Sri Lanka. The impact of major economic liberalization reforms on foreign trade (i.e. export and import) will also be analyzed at the end. In this paper, panel data estimation is conducted in the empirical analysis of impact of economic reforms on foreign trade in SA. The paper is organized as it follows: in the first part, basic trends and patterns of foreign trade for four major economies in SA such as Bangladesh, India, Pakistan and Sri Lanka will be discussed. In the second section, economic liberalization reforms and their impact on foreign trade of the above South Asian nations plus Nepal will be examined using panel data estimation. The final section concludes the paper