Two decades of spice trade among SAFTA nations - Is it really aromatic for India?

Authors

DOI:

https://doi.org/10.14719/pst.6357

Keywords:

agricultural trade, free trade agreement, gravity panel analysis, SAFTA, spices

Abstract

Regional Trade Agreements (RTAs) are the foundation of the multilateral trading mechanism and act as a path to boost trade, enhance market access and strengthen relations with economies across the globe. The growing number of trade agreements between countries and within regions reflects a global momentum towards economic openness and creating more dynamic and competitive market environments. This study employs the gravity model with panel data from 2002 to 2020 to examine the trade effects, including trade creation and trade diversion of the Free Trade Agreement (FTA) on the spices trading between India and SAARC member countries under the South Asian Free Trade Agreement (SAFTA). The analysis shows a trade creation effect of SAFTA in the fixed effect (FE) model. The results also suggest that the spice trade could help in improving the Indian economy with SAFTA. India being the major spice exporter to the world nations and SAARC countries, has the relative trade advantage in spice trade with members of SAARC nations. Globally, India can use the advantage of exporting spices for higher value rather than for high volume proportional to the distance, which is a proxy for the trade costs.

Downloads

References

Grossman GM, Helpman E. Innovation and growth in the global economy. MIT Press Books. 1993;1. https://econpapers.repec.org/RePEc:mtp:titles:0262570971

Feenstra RC. Trade and uneven growth. Journal of Development Economics. 1996;49(1):229–56. https://doi.org/10.1016/0304-3878(95)00059-3

Edwards S. Openness, productivity and growth: what do we really know?. The Economic Journal. 1998;108(447):383–98. https://doi.org/10.1111/1468-0297.00293

Frankel JA, Romer D. Does trade cause growth?. In: Global Trade. 2017:255–76. Routledge. https://www.taylorfrancis.com/chapters/edit/10.4324/9781315254166-11/trade-cause-growthjeffrey-frankel-david-romer

Dollar D, Kraay A. Trade, growth and poverty. The Economic Journal. 2004;114(493): F22–49. https://doi.org/10.1111/j.0013-0133.2004.00186.x

Harrison A. Openness and growth: A time-series, cross-country analysis for developing countries. Journal of Development Economics. 1996;48(2):419–47. https://doi.org/10.1016/0304-3878(95)00042-9

Rodrik D, Subramanian A, Trebbi F. Institutions rule: the primacy of institutions over geography and integration in economic development. Journal of Economic Growth. 2004;9:131–65. https://link.springer.com/article/10.1023/b:joeg.0000031425.72248.85

Wacziarg R, Welch KH. Trade liberalization and growth: New evidence. The World Bank Economic Review. 2008;22(2):187–231. https://doi.org/10.1093/wber/lhn007

Bellmann C, Biswas T, Chamay M. Recent trends in world trade and international negotiations. International Development Policy. Revue internationale de politique de développement. 2010;(1):161–87. https://doi.org/10.4000/poldev.143

Anderson JE. The gravity model, annual review of economics. Annual Reviews. 2011;3(1):133–60 [Internet]. https://www.annualreviews.org/content/journals/10.1146/annureveconomics-111809-125114

World Integrated Trade Solution. World Bank [Internet]. Available at: https://wits.worldbank.org/

Bandolkar KN, Sudarsan PK. India's bilateral trade agreements and export competitiveness of agricultural commodities. Asian Economic and Financial Review. 2023;13(6):379–92. https://:doi.org/10.55493/5002.v13i6.4785

Francis S. A sectoral impact analysis of the ASEAN-India free trade agreement. Economic and Political Weekly. 2011;8:46–55. https://www.jstor.org/stable/27918013

Sebastian J, Praveen KV. Performance and prospects of spice trade in India: An economic analysis. https://www.cabidigitallibrary.org/doi/full/10.5555/20203071491

Agriculture and Processed Foods Export Development Agency [APEDA]. Agri export zones of India, agriculture and processed foods export development agency, New Delhi; 2015. http://apeda.gov.in/apedawebsite/index.html

Spices Board. Review of export performance of spices during 2017–18. Spices Board, Kochi; 2019. http://www.indianspices.com/export

Sharma K. Factors determining India’s export performance. Journal of Asian Economics. 2003;14(3):435–46. https://doi.org/10.1016/S1049-0078(03)00036-8

Spice Board. Data. Area and production of Indian states – state wise data [Internet]; 2023. https://www.indianspices.com/sites/default/files/majorstatewise%20areaproduction%202023-24%20web.pdf

Centre d’Etudes Prospective at d’ Informations Internationales (CEPII); 2023. https://cepii.fr/CEPII/en/bdd_modele/bdd_modele_item.asp?id=32

World Bank database. WITS [World Integrated Trade Solution]. https://wits.worldbank.org/

Helpman, Elhanan, Krugman, Paul R. Market structure and foreign trade. Cambridge, Massachusetts: The MIT Press; 1985.

Tinbergen J. Shaping the world economy: Suggestions for an international economic policy. The Twentieth Century Fund; 1962. https://repub.eur.nl/pub/16826/Appendices.pdf

Linnemann H. An econometric study of the international trade flows. Holland Publishing; 1966. https://cir.nii.ac.jp/crid/1130282272583223168

Eichengreen BJ, Irwin DA. The role of history in bilateral trade flows. Cambridge, Mass: National Bureau of Economic Research; 1996. https://doi.org/10.7208/9780226260228-006

Anderson JE. A theoretical foundation for the gravity equation. The American Economic Review. 1979;69(1):106–16. https://www.jstor.org/stable/1802501

Bergstrand JH. The gravity equation in international trade: Some microeconomic foundations and empirical evidence. The Review of Economics and Statistics. 1985:474–81. https://doi.org/10.2307/1925976

Bergstrand JH. The generalized gravity equation, monopolistic competition and the factor-proportions theory in international trade. The Review of Economics and Statistics. 1989:143–53. https://doi.org/10.2307/1928061

Baltagi BH. Econometric analysis of panel data. 2nd Ed, New York: John Wiley and Sons; 2001. https://link.springer.com/book/10.1007/978-3-030-53953-5

Greene WH. Econometric analysis. 5th Ed, Upper Saddle River, New Jersey: Prentice Hall; 2003. https://worldveg.tind.io/record/15444/

Griffiths WE, Hill RC, Judge GG. Learning and practicing econometrics. New York: John Wiley and Sons; 1993. https://dl.acm.org/doi/abs/10.5555/530164

Gujarati DN. Basic Econometrics. McGraw-Hill. New York; 2003. https://archive.org/details/basiceconometric0004guja

Maddala GS. Introduction to econometrics. 3rd Ed, New York: John Wiley and Sons; 2001. https://www.revecap.alde.es/revista/numeros/03/pdf/raymond.pdf

FAO [Food and Agriculture Organization]. https://www.fao.org/faostat/en/#data/EM 2020

Egger P. On the problem of endogenous unobserved effects in the estimation of gravity models. Journal of Economic Integration. 2004:182–91. https://www.jstor.org/stable/23000632

Published

05-02-2025 — Updated on 13-02-2025

Versions

How to Cite

1.
Kalpana EN, Shivakumar KM, Vidhyavathi A, Mahendran K, Jagadeeswaran R, Kalpana M. Two decades of spice trade among SAFTA nations - Is it really aromatic for India?. Plant Sci. Today [Internet]. 2025 Feb. 13 [cited 2025 Mar. 30];12(1). Available from: https://horizonepublishing.com/journals/index.php/PST/article/view/6357

Issue

Section

Research Articles

Most read articles by the same author(s)

1 2 3 > >> 

Similar Articles

You may also start an advanced similarity search for this article.