Kardan Journal of Economics and Management Sciences

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Trade Potential of Afghanistan against SAARC: An application of Gravity Model Approach

Mr. Sayed Shabeer Ahmad, Dr. Nassir Ul Haq Wani

Volume 1 Issue 4 | Oct 2018

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Abstract

This study attempts to estimate the trade potential of Afghanistan by applying the gravity model of trade and analyzing the panel data for the period of (2006-2017) across the selected 4 countries of the SAARC (Afghanistan, Bangladesh, India and Pakistan) and the coefficients obtained from the model have been used for predicting the country’s trade potential within the specific trading countries. The results revealed that Afghanistan’s trade potential is highest with Pakistan, followed by the India and Bangladesh. Therefore, Afghanistan should explore the ways and means to further improve its trade relations with the countries and make concentration on improvement of its market share as for as possible. Currently, the volume of trade between the Afghanistan and its trading partners in the SAARC member countries, specifically with the Pakistan and India is quiet high but still in case of Bangladesh, there is a chance to further escalate the trade potential. The study proposed that Afghanistan should use trade as a means of economic development to flourish in the region and capture the markets for realizing its maximum trade potential.


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