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Gains from the India–GCC Free Trade Agreement: A General Equilibrium Analysis

  • Nitin Arora
  • Pouria Mohajeri
Chapter

Abstract

This chapter uses the Global Trade Analysis Project (GTAP) model to explain the relative benefits of India aligning with Gulf Cooperation Council (GCC) countries. We use a GTAP-8 database to handle the general equilibrium model of 19 regions over 15 commodity groups. The discussion endeavors to analyze the expected gains from the India–GCC trade agreement, which has been signed but has not been put into effect. From our analysis, we conclude that India will be a net loser while GCC countries will be net gainers under this free trade agreement (FTA). The loss to India will appear on the current account because of unfavorable terms-of-trade with GCC countries. The same loss will be reflected as a welfare loss, and Indian policy planners are advised to work in the direction needed to convert the expected losses into substantial gains.

References

  1. Arora, R., Singh, S., & Mathur, S. K. (2015). Assessment of the proposed India-China Free Trade Agreement: A general equilibrium approach. Journal of Centrum Cathedra, 8(2), 81–108.  https://doi.org/10.1108/JCC-08-02-2015-B002 CrossRefGoogle Scholar
  2. McDougall, R. (2001). A new regional household demand system for GTAP. Revised in 2003. GTAP technical paper no. 20, Purdue University.Google Scholar

Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Nitin Arora
    • 1
  • Pouria Mohajeri
    • 2
  1. 1.Panjab UniversityChandigarhIndia
  2. 2.ICCR Fellow from IranPanjab UniversityChandigarhIndia

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