Playing with numbers: Critical evaluation of quantitative assessments of South Asian regional integration

Abstract

Quantification of gains and losses of South Asian Regional Integration has become a visible contribution to the literature on South Asian trade policy. Two main empirical techniques - the gravity model and the computable general equilibrium model - have been used in the growing number of empirical studies, which have generated numbers related to very large welfare gains and a three or four times increase in intra-regional trade. In this paper, I critically evaluate such quantitative studies by comparing and contrasting the results systematically. The evaluation demonstrates that there is considerable uncertainty about the reliability of empirical assessments. The diversity of the results suggests that these studies are not capable of convincing policymakers and negotiators about the impact of preferential trading within the region. Therefore, repeating similar exercises is not worthwhile without improving the reliability of empirical analysis by addressing the limitations of previous studies