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Regulatory efficiency and Free Trade in SAARC: Implications on impacts of OBOR on SAARC Trade

Author of this article is Kasuni Ranasinghe [Analyst, Institute of National Security Studies Sri Lanka] 

This was supervised by Dr. Priyanga Dunusinghe and Professor Athula Ranasinghe of University of Colombo. This article was originally published in the Colombo Journal of Multidisciplinary Research. 

This research article does not reflect the stance of INSSSL or the Government of Sri Lanka

Abstract

Transportation is a strong factor in terms of economic development. As well as also having a great influence on regional integration. South Asia has a rich history of trade through sea. Thus ports constitute important economic activities in the region. This paper mainly exposes the role of the efficiency of harbors in trade performances. An extended version of gravity model is used to analyze the correlation of transport infrastructure and exports of South Asia. For the purpose of analysis in this paper, all eight South Asian countries are identified as exporters and selected 25 countries as the partnering countries. Estimated results show that the distance between two countries has negative impact on trade. Country size measured in terms of GDP has positive effect on trade. It is also observed that the compliance time in both reporting country as well as the partner country has a significant influence on trade. Higher compliance time discourages trade. Based on this finding, this study explores the impacts of OBOR on SAARC trade. It is anticipated that the OBOR expands trade through its impact on reducing compliance time.

Key Words: Harbor efficiency, SAARC Economic Integration, OBOR, Gravity Model

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