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GTAP Resource #5206

"Economic Impacts of Trade Delays in South Asia: GTAP Application of Ad-Valorem Equivalents of Time to Trade"
by Ahangamage, Subashini and Mahinda Siriwardana

Trade delays can be relatively more costly when compared to tariffs on trade in developing regions such as South Asia. However, analysing the economy wide impacts of trade delays is complex. This is a challenge for CGE modellers since data relating to value of time to trade at the borders is not available in the GTAP database. The purpose of this paper is to quantify the economic impacts of trade delays in South Asia by incorporating ad valorem equivalents of trade delays database into the GTAP model. The GTAP sectors were aggregated based on time sensitive sectors versus time insensitive sectors and regions were aggregated considering South Asia and its major trading partners. Nepal, Bhutan and Afghanistan were grouped as landlocked countries. Trade delays were implemented in the GTAP model based on the iceberg approach and two types of simulation were carried out. The first simulation considered a 50 percent uniform reduction of trade delays and the second simulation identified the impact of a 50 percent reduction in trade delays only within South Asia. The simulation results show that the reduction in trade delays has a considerable impact on trade balance, regional income and welfare. Scenario 1 shows positive changes in GDP in all countries as a result of reduced trade delays. GDP will increase significantly in the landlocked countries. Interestingly, GDP is projected to rise in these countries at an even faster rate in scenario 2 which infers the expansion of intra-regional trade. This paper does reveal significant gaps related to the estimations of AVEs in developing countries and implementation of trade delays in the CGE modelling framework. The paper will further discuss the importance of extending the existing AVEs of trade delays database to be compatible with GTAP version 9.

Resource Details (Export Citation) GTAP Keywords
Category: 2017 Conference Paper
Status: Published
By/In: Presented at the 20th Annual Conference on Global Economic Analysis, West Lafayette, IN, USA
Date: 2017
Version: GTAP 8
Created: Ahangamage, S. (3/31/2017)
Updated: Ahangamage, S. (6/2/2017)
Visits: 1,897
- Non-Tariff barriers
- The GTAP Data Base and extensions
- Asia (South-Central)
- Asia (Southeast)

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