Agricultural Trade in SAARC Countries: Structure and Trade Linkages

The study has examined the structure, direction and magnitude of agricultural trade among SAARC countries. Since India is the largest economy among SAARC nations in terms of agricultural trade, the study has also tested the hypothesis of agricultural trade led growth. In South Asia, India and Pakistan are the principal countries trading cotton. The study has examined cointegration in cotton exports and imports of India and Pakistan. Cotton, cereals, fish & crustaceans, and tea & beverages were identified as the top four commodity groups exported during both triennium ending (TE) 2005 and 2013, which together accounted for more than 50 per cent share of exports from SAARC to the world. The SAARC countries provide various trade advantages due to their diverse agro-climatic conditions and topographic environment. Johansen method of cointegration was used to find the linkages between India's agricultural GDP & agricultural trade and total GDP & total trade. The analyses have revealed perfect integration among the trade components and GDP. Also, Granger causality test was carried out between India's agricultural GDP and agricultural trade. Cointegration analysis for cotton has revealed that cotton exports and imports from these countries are integrated and there is bidirectional causality among them. The study has revealed significant scope for expansion of exports from India to other SAARC countries.