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36 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
17.49 in 1991 to 96.3 in 2004) and between Bangladesh<br />
and Pakistan (from 62.5 in 1991 to 77.9 in 2004).<br />
In the manufactures sector, IIT between Bangladesh<br />
and Sri Lanka increased (from 31.1 in 1991 to 93.4 in<br />
2004). IIT between them also increased in the textiles<br />
sector (from 14.3 in 1991 to 80.3 in 2004) and other<br />
manufacturing sectors (from 24.8 in 1991 to 86.7 in<br />
2004).<br />
Potential thus exists for increased trade between<br />
Bangladesh and India and Bangladesh and Pakistan in<br />
the agricultural raw materials sector. It also exists<br />
between Bangladesh and Sri Lanka in manufactures,<br />
textiles and other manufactures sectors.<br />
Pakistan<br />
Pakistan maintained high IIT with Sri Lanka in the<br />
Agricultural Materials sector between 1991 and 2004<br />
(97.6 in 1991 and 94.5 in 2004). However, its IIT with<br />
Sri Lanka in the agricultural raw materials sector fell<br />
sharply (from 94.2 in 1991 to 6.1 in 2004) while<br />
registering a marginal increase with Bangladesh (from<br />
62.5 in 1991 to 77.9 in 2004). In the food sector,<br />
Pakistan’s IIT fell with respect to Bangladesh (from 95.9<br />
in 1991 to 71.4 in 2004), India (from 96.88 in 1991 to<br />
76.58 in 2004) and Sri Lanka (93.5 in 1991 to 68 in<br />
2004). In the manufactures sector, Pakistan’s IIT with<br />
India declined drastically (from 90.77 in 1991 to<br />
14.19 in 2004) while in the textiles sector it showed<br />
an appreciable rise (from 8.21 in 1991 to 89.69 in<br />
2004).<br />
There is thus large potential in trade between<br />
Pakistan and Bangladesh in the agricultural materials<br />
sector and between Pakistan and India in the textiles<br />
sector.<br />
In short, the results show that intra-industry trade<br />
has increased in many sectors for the major trading<br />
partners of SAFTA region in the year 1991 as compared<br />
to 2004. Intra-industry trade between Sri Lanka and<br />
India has increased in almost all sectors, especially in<br />
chemicals, machinery and textiles. India and<br />
Bangladesh have increased intra-industry trade in<br />
chemicals, agricultural raw materials and textiles.<br />
Bangladesh and Sri Lanka have increased their intraindustry<br />
trade in chemicals and textiles. With respect<br />
to Pakistan, we find that intra-industry trade with most<br />
of the major trading partners of SAFTA region has<br />
declined in many sectors. Textile is the only sector where<br />
intra-industry trade of Pakistan has improved with<br />
respect to other major trading partners. This indicates<br />
that the region has the potential to integrate its production<br />
structures in many sectors and improve its global<br />
competitiveness. Intra-regional trade can lead to better<br />
allocation of resources in the region; allow economies<br />
of scale and improve efficiency in production.<br />
Intra-industry Trade in the Textile Sector<br />
We examine in greater detail the possibility of intraregional<br />
trade in a sector where the countries of the<br />
region are at different degrees of competitiveness and<br />
compete in the third market, i.e. the textiles sector. This<br />
detailed analysis is undertaken using UNIDO dataset.<br />
However, at the industry level the trade data is not<br />
bilateral therefore intra-industry trade with respect to<br />
the rest of the world was studied for India, Pakistan,<br />
Bangladesh and Sri Lanka in 1991 and 2004. Since<br />
these four countries are also major exporters in the<br />
world in textile sector some inferences are drawn on<br />
the basis of the analysis. The trends as observed are<br />
presented in Table 3.7.<br />
Spinning, Weaving and Finishing Textiles Sector: India’s<br />
IIT increased from 0.2 in 1991 to 0.4 in 2004. At the<br />
same time Pakistan and Sri Lanka’s IIT have remained<br />
low at 0.1 while Bangladesh’s IIT fell from 0.5 in 1991<br />
to 0.3 in 2004. There is thus scope of trade between<br />
India and each of these countries.<br />
Manufacture of Made-Up Textile Goods Except<br />
Wearing Apparel: Intra-Industry Trade for all countries<br />
is very low for this sector. There is thus not enough<br />
potential for increasing trade between these countries<br />
in this sector.<br />
Knitting Mills: Sri Lanka shows high IIT in this sector<br />
with the other countries experiencing very low IIT with<br />
respect to the rest of the world. There is thus large<br />
potential for trade to expand between Sri Lanka and<br />
the other countries in the study.<br />
Manufacture of Carpets and Rugs: India and Pakistan<br />
show no IIT in this sector with Bangladesh’s IIT<br />
remaining low at 0.2 between 1991 and 2004. Sri<br />
Lanka’s IIT fell from 0.9 in 1991 to 0.5 in 2004 which<br />
highlights deterioration in IIT for Sri Lanka. There is<br />
thus an insufficient case for increasing trade between<br />
these countries in this sector.<br />
Cordage, Rope and Twine Industries: India, Pakistan<br />
and Sri Lanka exhibit high IIT in this sector. It is<br />
noteworthy however, that both India and Sri Lanka’s<br />
IIT fell from 0.9 in 1991 to 0.6 in 2004. With