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50 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA Table 6.4 Bangladesh Employment Gaining Sectors (% change) Winning Sectors Employment Increase Wearing apparel 5.90 Leather products 3.60 Chemical, rubber, plastic products 2.32 Cereal grains n.e.c. 1.48 Wood products 1.25 Forestry 1.20 Metals n.e.c. 1.12 Beverages and tobacco products 0.81 Processed rice 0.73 apparels, leather products, chemicals, cereal grains, wood products, forestry, metal (n.e.c), beverages and tobacco products and processed rice (Table 6.4). While sectors which lose out on employment due to SAFTA are petroleum products, meat products, transport equipment, electronic equipment, dairy products, metal products, gas, crops, sugar cane and sugar beet (Table 6.5). Table 6.5 Bangladesh Employment-Losing Sectors (% change) Losing Sectors Employment Decrease Petroleum, coal products –48.82 Meat products n.e.c. –26.92 Transport equipment n.e.c. –16.00 Electronic equipment –6.21 Dairy products –5.67 Metal products –2.88 Machinery and equipment n.e.c. –2.66 Gas –2.17 Crops n.e.c. –2.10 Sugarcane, sugarbeet –1.95 India A full SAFTA will help India to nearly double its exports to South Asia (Table 6.6). India’s export gains from SAFTA are limited to a few agriculture sectors and the auto sector where it is seen to have relative comparative advantage vis-à-vis the rest of South Asia. There are two agricultural sectors where India does gain significantly from SAFTA– poultry and sugar. In fact, its highest output gain is in the poultry sector, where output in ‘Other meat products’ shows an increase of over 100%, indicative of the high level of demand of poultry and high levels of protection of the same in the region. There is a 1.33% increase in output in sugar. Pakistan will be the main market for sugar exports in the region. India’s auto sector grows by 1–4% on account of SAFTA, with its regional exports Table 6.6 Impact of SAFTA on Output, Employment and Trade: India (% change) Year Output Effect on Exports Global Global Unskilled to Exports Imports Employ- South ment Asia 2008-09 0 –0.00001 3.41 0.09 0.11 2016 0.08 0.00002 90.44 1.19 1.68 in this sector increasing by 10–40%. This result is validated by the fact that countries like Bangladesh and Pakistan do maintain high tariffs in the auto industry. India’s global wearing apparel imports increase by 7% and with its output declines by 2.5%. The increase in imports is not significant in absolute terms; because India’s global import base is low (about $30–35 million in 2004). The decline in output is therefore largely attributable to loss in exports to the rest of the world (about 3.3% decline), which may be attributed to an increased competitiveness of Bangladesh in the wearing apparel sector. India’s auto sector grows by 1–4% on account of SAFTA, with its exports to the region increasing by 10–40%. This result is validated by the fact countries like Bangladesh and Pakistan do maintain high tariffs in the auto industry. India’s global wearing apparel imports increase by 7% and while its output declines by 2.5%. The increase in imports is not significant in absolute terms, because India’s global import base is low (about $30–35 million in 2004). The decline in output is therefore largely attributable to loss in exports to the rest of the world (about 3.3% decline), which may be attributed to an increased competitiveness of Bangladesh in the wearing apparel sector. In terms of impact of SAFTA on employment (Table 6.7), the following sectors gain in terms of employment generation. Table 6.7 India Employment Gaining Sectors (% change) Winning Sectors Employment Increase Meat products n.e.c. (poultry, etc.) 116.67 Transport equipment n.e.c. 3.80 Petroleum, coal products 2.68 Sugar 1.33 Mineral products n.e.c. 1.19 Motor vehicles and parts 0.88 Dairy products 0.83 Paper products, publishing 0.64 Sugarcane, sugarbeet 0.63 However, SAFTA leads to loss of employment in the following sectors (Table 6.8).
I MPACT OF SAFTA ON MEMBER COUNTRIES: GENERAL EQUILIBRIUM ANALYSIS 51 Table 6.8 India Employment-Losing Sectors (% change) Losing Sectors Employment Decrease Wearing apparel –2.46 Leather products –2.08 Manufactures n.e.c. –1.79 Bovine meat prods –1.37 Metals n.e.c. –1.17 Vegetable oils and fats –0.66 Plant-based fibers –0.45 Wool, silkworm cocoons –0.45 Minerals n.e.c. –0.36 Textiles –0.24 Pakistan Like India, a full SAFTA for Pakistan will help it double its exports to South Asia (Table 6.9). Pakistan sees good results for important employment-intensive agriculture sectors like wheat, horticulture, meat products (mainly poultry) and other food products. The textiles sector which is very important to the Pakistan economy sees an output expansion of about 0.5%. Also, like India, Pakistan tends to lose in both wearing apparel and leather products sectors. It also sees losses in the sugar sector, perhaps on account of its increased imports of this product from India. Table 6.9 Impact of SAFTA on Output, Employment and Trade: Pakistan (% change) Year Output Effect on Exports Global Global Unskilled to Exports Imports Employ- South ment Asia 2008-09 0.01 0 5.52 0.17 0.19 2016 0.02 –0.0001 102.41 0.77 1.54 GTAP shows a very interesting result in the case of both India and Pakistan. Contrary to popular intuition, India and Pakistan are not the most important markets vis-à-vis each other. More than 60% of the increase in exports to the region for both India and Pakistan are directed towards Bangladesh. A detailed look at disaggregated data reveals that more than 50% of Pakistan’s gains from SAFTA, are from increased exports to Bangladesh in textiles alone. In terms of impact of SAFTA on employment, the following sectors gain in terms of employment generation (Table 6.10). However, SAFTA leads to loss of employment in the following sectors (Table 6.11). Table 6.10 Pakistan Employment Gaining Sectors (% change) Winning Sectors Employment Increase Food products n.e.c. 5.59 Wheat 2.34 Vegetables, fruit, nuts 2.27 Wool, silkworm cocoons 1.49 Meat products n.e.c. (poultry etc.) 1.21 Machinery and equipment n.e.c. 1.01 Processed rice 0.55 Manufactures n.e.c. 0.55 Cereal grains n.e.c. 0.54 Textiles 0.48 Table 6.11 Pakistan Employment Losing Sectors (% change) Losing Sectors Employment Decrease Leather products –3.31 Wearing apparel –3.12 Metal products –2.28 Sugar –2.17 Oil seeds –2.12 Sugarcane, sugarbeet –1.66 Chemical, rubber, plastic products –1.20 Paddy rice –1.08 Metals n.e.c. –1.04 Vegetable oils and fats –0.90 Sri Lanka Sri Lanka’s gains in the first phase of liberalisation are almost nil (Table 6.12). This is largely because Sri Lanka already has close to free access to the Indian market, and also because LDCs and DCs have not committed to substantial liberalisation vis-à-vis Sri Lanka in the first phase. Table 6.12 Impact of SAFTA on Output, employment and Trade: Sri Lanka (% change) Year Output Effect on Exports Global Global Unskilled to Exports Imports Employ- South ment Asia 2008-09 0.1 0 2.52 0.05 0.14 2016 0.55 –0.000107 58.78 0.72 1.98 Sri Lanka’s gains are improved in the second phase, when all countries participate fully (and remove their negative lists). The increase in output in vegetable oils corroborates empirical evidence of duty structures that favour manufacture of edible oils. The textiles sector, which contributes to about 5% of total output in Sri
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QUANTIFICATION OF BENEFITS FROM ECO
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QUANTIFICATION OF BENEFITS FROM ECO
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Preface Our consultations with seni
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viii CONTENTS 7. Revenue and Welfar
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Executive Summary OBJECTIVE This st
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EXECUTIVE SUMMARY xiii Table 1 EAMA
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EXECUTIVE SUMMARY xv India A full S
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EXECUTIVE SUMMARY xvii indicates th
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100 QUANTIFICATION OF BENEFITS FROM
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11 Construction and Related Enginee
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12 Tourism and Travel Related Servi
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14 Health and Related Services 1 IN
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15 Prospects for the Telecommunicat
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APPENDICES
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Appendix 8 Intra SAARC FDI Collabor
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Appendix 11 Table A11.1 On an Emplo
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Appendix 12 Original Commitments/In
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Appendix 14 Table A14.1 Telecommuni
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Appendix 15 REFERENCE PAPER Scope T
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Bibliography Abelson, P. (1996),
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BIBLIOGRAPHY 241 Cuba (2002), Negot
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BIBLIOGRAPHY 243 (2004), Impacts of
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BIBLIOGRAPHY 245 Silva, Patricia an
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BIBLIOGRAPHY 247 (1998), Tourism Se
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