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Doha Round Impacts on India: A Study in a Sequential Dynamic CGE Framework

Raihan, Selim and Khondker, Bazlul Haque (2010): Doha Round Impacts on India: A Study in a Sequential Dynamic CGE Framework.

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Abstract

The objective of this research has been to examine the impact of Doha round negotiations on the economy of India. This research looked into the impact of agricultural trade liberalisation and the impact of NAMA negations under the Doha negotiations, the combined effects of agricultural and NAMA negotiations, and the impact of liberalisation of the domestic services sectors. With a view to addressing these important issues, this study has examined the effects of the Doha agreement for India in a sequential dynamic computable general equilibrium (CGE) framework. A Social Accounting Matrix for the year 2006 has been used as the database. The major findings of these exercises suggest that agricultural liberalization under the Doha round would have very little effect on Indian GDP. The welfare effects are positive and the effects are stronger in the long run. Poverty falls for all household categories both in the short and long run. In sum, the agricultural trade liberalization would generate positive outcomes for the Indian economy. The NAMA scenario would lead to a rise in real GDP despite the fact that a number of manufacturing sector would contract. This is because of the more than offsetting effect of the expansion of textiles as well as some services and agricultural sectors. Poverty indices would rise for all household categories and the households relying more on non-agricultural capital income as well as on unskilled labour income would experience higher incidence of poverty. In sum, the NAMA scenario would lead to some negative outcomes for the Indian economy. The full Doha scenario would lead to rise in real GDP in the short run and the effect is stronger in the long run. In the short run, the aggregate welfare declines. However, in the long run the negative effect on welfare appears to be very minimal. In sum, the Doha scenario would lead to a mixed results.

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