Dynamic of Trade Specialization and Performance of SAFTA: A Case Study of Afghanistan

Rasa, Mohammad Mirwais (2022): Dynamic of Trade Specialization and Performance of SAFTA: A Case Study of Afghanistan.

Abstract

Background: SAFTA aims to encourage and create a joint agreement among the countries, which includes medium and long term agreements. SAFTA increased the local economic incorporation by advertising the favoured trade between SAARC countries. The association of Afghan with SAARC member countries is based on the trade, which is considered the most important for improving the economic stability and regional connectivity. The regional integration in South Asia has become prevalent since the WTO's negotiations, and is significant in generating intraregional trade and dynamic gains for the South Asian countries.

Aim: The main aim of this study and examine was based on the understanding of dynamics and effectiveness of SAFTA for Afghanistan Free Trade Agreement.

Method: Secondary research was adopted with quantitative research design to execute content analysis. Content analysis allowed to evaluate existing data, evidence, trends and patterns in current studies, publications, and financial institutions sites.

Findings: From 2011to 2019, after SAFTA was implemented, Afghanistan showed predominant growth in export and import. Regarding trade specialization it has been categorized in six groups within High skill and technology intensive manufactures Afghanistan displays a mixed trend in its trade specialization that shows decrease in negative values in last years. In Low skill and technology intensive manufactures Afghanistan demonstrates an improvement in its trade specialization index values with fall in negative LFi value. Regarding Medium skill and technology intensive manufactures Afghanistan shows a mixed but clear increase in negative value of LFi index. Mineral fuel manufactures Afghanistan reveals an increase in its trade specialization with a decrease in the negative average LFi value. Non-fuel primary commodity Afghanistan shows a positive indication of trade specialization. Lastly Resource intensive manufacture Afghanistan highlighted the continuous decline in its trade specialization from positive to negative.

Conclusion: SAFTA has helped Afghanistan majorly in trade operations and enhanced its trade openness by increasing demand and supply, export and import assurance, and trade specialisation while improving trade relationships in the region and with neighbouring countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Afghanistan, Trade Specialisation, SAFTA, Trade Dynamics
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F45 - Macroeconomic Issues of Monetary Unions

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