DefinePK

Abstract

The objective of this article is to evaluate the impact of Pakistan-Sri Lanka Free Trade Agreement (FTA) on Pakistan's and Sri Lanka's macroeconomic structures. The FTA is operational since June 2005. For this purpose, the Computable General Equilibrium (CGE) Model has been used and simulations have been conducted by using the Global Trade Analysis Project (GTAP) model, which measures the effect of FTA on Pakistan. The GTAP is a General Equilibrium modeling structure of the multiple economies. The finding of this study reflects that Pakistan has positive impact on real GDP, trade and welfare, while Sri Lanka has negative impact on the same factors. Moreover, the results of this study are coherent with the international trade theories. This research assists the trade policy makers to adopt appropriate policies for future FTAs with South Asian economies to obtain more gains for Pakistan.