IMPLICATION OF SOUTH ASIAN TRADE ON ECONOMY OF PAKISTAN BY USING CGE-MODEL

The current research investigates the impact of South Asian Free Trade Agreement SAFTA on Pakistan's Economy by Using CGE model. The Global trade analysis GTAP model is used to analyze the possible impact of SAFTA on Pakistan in a multi country, multi sector applied General equilibrium frame work. Results shows that the share of exports in GDP has also raised as the region became more industrialized. A greater reliance on exports has helped the region to sustain rapid growth rate but at the same time it has made the region more dependent upon import demand from the rest of the world particularly the industrial countries. These countries were running huge surpluses in 2000 and 2001, compared with large deficits just a few years earlier. Indeed, it is assumed that the initial export growth and trade surplus generates such favorable responses in the economy that the balance of payments surplus actually grows. s. The export of Rice, leather and cotton-made garments may be conducted by two scenarios, i.e. when normal trading relations between Pakistan and India will be restored and when there will be a free trade between Pakistan and India in the presence of South Asian Free Trade Agreement (SAFTA). Results based on this research reveal that on SAFTA, grounds, there will be net export benefits in Pakistan's economy.