Citation:

Dr. Jyotsna. "Intra- Regional Trade Practices by Using Gravity Model: A Study on India and Srilanka" International Research Journal of Economics and Management Studies, Vol. 2, No. 2, pp. 559-567, 2023.

Abstract:

The study increases the economic and trade ties between India and Sri Lanka, focuses on their trade interactions, and advances intra-regional trade and integration. This essay aims to empirically examine the effects of bilateral commerce between Sri Lanka and India. The information was gathered from the World Bank's World Governance Indicators, World Development Indicators, ARIC, Ministry of Commerce and Industry, and for the years 2000 to 2019. The gravity model, which is frequently used to estimate international trade flows with explanatory factors and policy implications for innovative variables or parameters affecting bilateral trade flows, will be applied for intra-regional trade to analyse India and Sri Lanka's trade with BIMSTEC members. Dependent variables are the estimation of trade costs that are undertaken with bilateral trade as the dependent variable. An independent variable is GDP (Gross Domestic Product) per capita, Distance, border, and common language. The statistical method and tool known as OLS (Ordinary Least Square) is used to calculate the coefficient of gravity model variable in log-linear linear form. The empirical results imply that intra-regional trade between Sri Lanka and India is positive. This essay makes the case that both nations' governments ought to implement some targeted policies to promote regional economic integration. For the advantage of their economies, these nations should have a greater political understanding of one another.

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Keywords:

Bilateral Trade, BIMSTEC, Gravity model, Intra-regional trade.