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Regional Trade Liberalization in Sri Lanka: A CGE Analysis


Ajitha Tennakoon

Senior Lecturer, Department of Economics, University of Kelaniya, LK
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Regional Trade liberalization is an integral part of Sri Lanka’s overall development strategy which involves a reciprocal process connected with liberalization. The purpose of this paper is to present a quantitative assessment of major regional trade liberalization reforms in Sri Lanka. The Global Trade Analysis Project (GTAP) CGE model has been employed to empirically assess the impact of trade liberalization. The results seem to indicate if Sri Lanka implements both unilateral and regional trade liberalization simultaneously; the combined policy would provide the highest welfare gains.  But regional trade liberalization alone can provide higher welfare gains due to the reciprocal benefits of SAFTA and ISFTA, Integration with regional trading partners will result not only in direct economic gains but also in indirect spin-off benefits beyond those envisaged in the agreements.  This study contributes to the empirical literature on trade liberalization.

Key words: Trade policy reforms; unilateral trade liberalization; regional trade liberalization; SAFTA; ISFTA; welfare gains.
JEL classification: F13, F15, F 17.

Sri Lankan Journal of Humanities and Social Sciences Vol.1(1) July 2009

How to Cite: Tennakoon, A., 2010. Regional Trade Liberalization in Sri Lanka: A CGE Analysis. Sri Lanka Journal of Humanities and Social Sciences, 1(1), p.None.
Published on 09 Dec 2010.
Peer Reviewed


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