Determinants of Agricultural and Industrial Trade in South Asia: Empirical Evidence from Panel ARDL Approach
DOI:
https://doi.org/10.5281/zenodo.21604766Abstract
This study examines the determinants of agricultural and industrial trade in South Asia using balanced panel data from 1990 to 2024. The study focuses on how key macroeconomic and structural factors influence trade performance in the region. Agricultural and industrial trade are considered as dependent variables, while employment in the agriculture and industrial sectors, foreign direct investment (FDI), exchange rate, inflation rate, and trade liberalization are used as explanatory variables. The study applies the Panel Autoregressive Distributed Lag (Panel ARDL) approach to estimate both short-run and long-run relationships among the variables. The findings reveal that employment in both sectors significantly promotes trade expansion, highlighting the role of labor availability and productivity in improving export capacity. FDI inflows also show a positive and significant contribution, suggesting that foreign capital supports technology transfer, production efficiency, and integration into international markets. Trade liberalization positively affects both agricultural and industrial trade by reducing trade barriers and enhancing market access. However, exchange rate depreciation/instability and inflation rate negatively affect trade performance, reflecting reduced competitiveness, higher production costs, and macroeconomic uncertainty. Overall, the study concludes that stable macroeconomic policies and structural reforms are essential for strengthening trade growth in South Asia. The study provides important policy insights for enhancing trade competitiveness and sustainable economic development in the region.
Keywords:
Agriculture Trade; Industrial Trade; PMG-ARDL; South Asia
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