In large number of circumstances, trade policy modellers turn to partial equilibrium modelling in an imperfect substitutes framework. This article develops a formal representation of this imperfect substitutes model and applies it to trade liberalization within the negative list between Pakistan and India following Pakistan’s decision to grant most favoured nation (MFN) status to India. It provides estimates for ranges of output and welfare effects for a number of sectors of interest. It sets these results within the history of Pakistan–India trade and the political economy of the negative list.
ArmingtonP. (1969). A theory of demand for products distinguished by place of production. IMF Staff Papers, 16(3), 159–176.
2.
BaldwinR.E.MurrayT. (1977). MFN tariff reductions and developing country trade under the GSP. Economic Journal, 87(345), 30–46.
3.
BandaraJ.S.YuW. (2003). How desirable is the South Asian Free Trade Area? A quantitative economic assessment. World Economy, 26(9), 1293–1323.
4.
BeteilleT.KochharK. (2012). India–Pakistan trade: Making borders irrelevant. End poverty in South Asia (World Bank Blog), 26April.
5.
BurnsM.E. (1973). A note on the concept and measure of consumer’s surplus. American Economic Review, 63(3), 335–344.
6.
DeP.RaihanS.GhaniE. (2013). What does MFN trade mean for India and Pakistan? Can MFN be a panacea? (World Bank Policy Research Working Paper 6483). Washington, DC: World Bank,.
7.
FrancoisJ.F.HallH.K. (1997). Partial equilibrium modeling. In FrancoisJ.F.ReinertK.A. (Eds), Applied methods for trade policy analysis: A handbook (pp. 122–155). Cambridge: Cambridge University Press.
8.
FrancoisJ.F.ReinertK.A. (1997). Applied methods for trade policy analysis: An overview. In FrancoisJ.F.ReinertK.A. (Eds), Applied methods for trade policy analysis: A handbook (pp. 3–24). Cambridge: Cambridge University Press.
9.
FrancoisJ.F.ReinertK.A (2009). Partial equilibrium models. In ReinertK.A.RajanR.S.GlassA.J.DavisL.S. (Eds), The Princeton encyclopedia of the world economy (pp. 891–894). Princeton: Princeton University Press.
10.
GhumanR.S.MadaanD.K. (2006). Indo-Pakistan trade cooperation and SAARC. Peace and Democracy in South Asia, 2(1–2), 71–87.
11.
HegreH.OnealJ.R.RussettB. (2010). Trade does promote peace: New simultaneous estimates of the reciprocal effects of trade and conflict. Journal of Peace Research, 47(6), 763–774.
12.
KhanM.S. (2009). India–Pakistan trade: A roadmap for enhancing economic relations. Policy Brief 09-15, Peterson Institute for International Economics.
13.
KhanM.S (2012). India–Pakistan trade breakthrough?East Asia Forum, 11March.
14.
KhanM.S (2013). India–Pakistan trade relations: A new beginning. Washington, DC: New America Foundation.
15.
KhanS.R.YusufM.BokhariS.AzizS. (2007). Quantifying informal trade between India and Pakistan. In NaqviZ.F.SchulerP. (Eds),The challenges and potential of Pakistan–India trade (pp. 87–105). Washington, DC: World Bank.
16.
KochharK.GhaniE. (2013). What can India and Pakistan do to maximize the benefits from trade? In KugelmanM.HathawayR.M. (Eds), Pakistan–India trade: What needs to be done? What does it matter? (pp. 97–115). Washington, DC: The Wilson Center.
17.
KugelmanM. (2013). The Pakistan–India trade relationship: Prospects, profits, and pitfalls. In KugelmanM.HathawayR.M. (Eds), Pakistan–India trade: What needs to be done? What does it matter? (pp. 1–17). Washington, DC: The Wilson Center.
18.
MainiT.VaidM. (2012). Indo-Pak trade: A visit to historical relations. CUTS International Briefing Paper 5.
19.
MurshedS.M.MamoonD. (2010). Not loving thy neighbour as thyself: Trade, democracy and military expenditure explanations underlying India–Pakistan rivalry. Journal of Peace Research, 47(4), 463–476.
20.
NabiI (2013). Pakistan’s trade with India: Thinking strategically. In KugelmanM.HathawayR.M. (Eds), Pakistan–India trade: What needs to be done? What does it matter? (pp. 31–52). Washington, DC: Woodrow Wilson Center.
21.
NabiINasimA (2001). Trading with the enemy. In LahiriS. (Ed.), Regionalism and globalization (pp.170–198). London: Routledge.
22.
NaqviZ.F.SchulerP.RichterK. (2007). Pakistan–India trade: Overview and key issues. In NaqviZ.F.SchulerP. (Eds), The challenges and potential of Pakistan–India trade (pp. 1–28). Washington, DC: World Bank.
23.
NawazS. (2009). Crossed swords: Pakistan, its army, and the wars within. Oxford: Oxford University Press.
24.
NooraniT. (2012). MFN status and trade between Pakistan and India.Pakistan Institute of Legislative Development and Transparency Background Paper.
25.
Pakistan Bureau of Statistics (2009). Census of manufacturing industries, 2005–06. Islamabad.
26.
Pakistan Ministry of Commerce (2012). SRO No. 280(I)/2012. Islamabad.
27.
PanagariyaA. (1999). Trade policy in South Asia: Recent liberalization and future agenda. World Economy, 22(3), 353–378.
28.
ReinertK.A.Roland-HolstD.W. (1992). Armington elasticities for United States manufacturing sectors. Journal of Policy Modeling, 14(5), 631–639.
29.
RousslangD.J.SuomelaJ.W. (1988). Calculating the welfare costs of import restrictions in the imperfect substitutes model. Applied Economics, 20(5), 691–700.
30.
ShabirS.KazmiR. (2007). Economic effects of the recently signed Pak-China Free Trade Agreement. Lahore School of Economics Journal, Special Edition, 173–202.
31.
ShiellsC.R.ReinertK.A. (1993). Armington models and terms-of-trade effects: Some econometric evidence for North America. Canadian Journal of Economics, 26(2), 299–316.
32.
State Bank of Pakistan (2006). Implications of liberalizing trade and investment with India. Islamabad.
33.
TanejaN. (2005). Informal trade in South Asia: How to channelize to a formal route? CUTS Briefing Paper RECSA 5/2005, Center for Consumer Action, Research & Training, Jaipur.
34.
TanejaN (2013). Additional trade challenges: Transport, transit, and non-tariff barriers. In KugelmanM.HathawayR.M. (Eds), Pakistan–India trade: What needs to be done? What does it matter? (pp. 75–96). Washington, DC: The Wilson Center.
35.
WolpertS. (2011). India and Pakistan: Continued conflict or cooperation?Berkeley: University of California Press.
36.
World Trade Organization (WTO) (2007). Trade policy review of Pakistan. Geneva.
37.
World Trade Organization (WTO) (2012). World trade report. Geneva.
