Badri G. Narayanan

An Overview of the GTAP 9 Data Base

This paper provides an overview of the Global Trade Analysis Project (GTAP) Data Base and its latest release, version 9. The GTAP Data Base has been used in thousands of economy-wide analyses over the past twenty-five years. While initially focused on supporting trade policy analysis, the addition of satellite accounts pertaining to greenhouse gas emissions and land use has resulted in a surge of applications relating to climate change as well as other environmental issues. The Data Base comprises an exhaustive set of accounts measuring the value of annual flows of goods and services with regional and sectoral detail for the entire world economy. These flows include bilateral trade, transport, and protection matrices that link individual country/regional economic datasets. Version 9 disaggregates 140 regions, 57 sectors, 8 factors of production, for 3 base years (2004, 2007 and 2011). The great success enjoyed by this Data Base stems from the collaboration efforts by many parties interested in improving the quality of economic analysis of global policy issues related to trade, economic development, energy and the environment.

An Analysis of Tariff Reductions in the Trans-Pacific Partnership (TPP): Implications for the Indian Economy

Our purpose is to undertake a comparative analysis of the likely impact of tariff reduction under the Trans-Pacific Partnership (TPP) on various macro and trade variables of the Indian economy under different scenarios. The TPP was concluded in October 2015, but it is yet to be ratified by the partner countries, and while Asian giants like India, China and Korea have not joined the TPP, there are some talks about their joining the partnership in future. Ours is a unique study that evaluates India’s perspective on joining the TPP, in terms of tariff reduction, and not in terms of the removal of non-tariff barriers. We employ the widely used standard Global Trade Analysis Project (GTAP) model for this exercise. This is a unique framework with a global economy-wide approach, in a Computable General Equilibrium (CGE) setting. Five different scenarios of complete integration in terms of tariff reduction between different regions are simulated using the GTAP model. Under each scenario, the tariff among members of a group of regions is eliminated, but is unchanged for other regions. Higher welfare arising from allocative efficiency comes with the cost of a relatively lower consumption of domestic products and investment, resulting in a loss in terms of GDP. Therefore, we conclude that there are mixed prospects and no strong reason for India to pursue being part of the TPP in future, from a perspective of tariff reductions. JEL Classification: F15, F17

Foreign tourist arrivals in India from major source countries: an empirical analysis

The tourism industry is a significant contributor to the world economy and needs to be carefully evaluated for impact by influencing factors such as external shocks. Several practical implications are associated with the testing of the unit root hypothesis in the context of foreign tourist arrivals in India. For instance, if the unit root process is followed, it implies that shocks to foreign tourist arrivals are permanent in nature rather than temporary. This study employed a battery of time series unit root tests in an attempt to examine whether foreign tourist arrivals in India from 17 major source countries between 1981 and 2012 were permanently or temporarily affected by shocks. The empirical results of this study revealed that shocks to foreign tourist arrivals in India from eight source countries have only a temporary effect and shocks form rest of nine countries have permanent impact. It may therefore be concluded that the government should focus on long-term solutions for those eight source countries where the null hypothesis of unit root is rejected in order to promote international tourist arrivals rather than implementing temporary measures.

Trade Facilitation in the Commonwealth: An Economic Analysis

This article examines the economic impact of trade facilitation between Commonwealth country members, using a global computable general equilibrium framework. We document enormous economic impact, much higher than a complete tariff liberalisation amongst these countries. The economic impact is quite visible in terms of welfare, gross domestic product, employment and trade in several sectors. We abstract from the costs involved in such trade facilitation—accounting for them is beyond the scope of this study. JEL Classification: F13, F62, F68

Effect of climate policies on labor markets in developing countries : review of the evidence and directions for future research

This study surveys one of the critical welfare aspects of contemplating climate policies in developing countries and their potential effect on workers and labor markets. The existing body of evidence finds that climate policies will likely cause a significant reduction of jobs in fossil-fuel industries. These industries make up a relatively small share of total employment, even in fossil-fuel-intensive countries. Therefore, the effect on aggregate employment will likely be small, especially over the long term, since there will be offsetting gains in other industries. However, most of the literature ignores the key features of developing country labor markets and may significantly misrepresent the dynamics of labor market adjustment to climate policies.

Building a global database: consequences for the national I–O data

ABSTRACT Global economic analysis requires consistent and balanced data, which necessitates the reconciliation of datasets from both national and international sources. In the case of the Global Trade Analysis Project Data Base, datasets supplied by international sources are considered preferable to national input–output (I–O) tables. As a result, the national I–O data can experience significant adjustments during the reconciliation process due to differences between the national and international datasets. The purpose of this paper is to examine the extent to which national I–O data change during reconciliation. The results demonstrate that the I–O data are altered by the construction process, particularly from the reconciliation of the national I–O data to the international trade and energy datasets. Closer examination reveals potential issues with both the trade and energy datasets, as well as the national I–O data – illustrating the challenges associated with reconciling data from multiple sources.

Assessment of Impact of Food-Safety Measures on Exports: A Gravity and CGE Analysis Focusing on India

This chapter analyzes the impact of food safety measures on Indian exports using the gravity and computable general equilibrium models. Sanitary and phytosanitary (SPS) measures are not subject to negotiation or removal (like other nontariff measures) due to their welfare aim, and hence are here to stay. Hence, it becomes important to identify the impact of SPS measures on trade flows. This chapter tries to answer the question of whether or not high standards imposed by the importer act as a barrier to exports. Empirical studies have been divided on this issue. Some studies have found a positive impact of SPS measures on trade and some have not.

Modelling Effects of Tariff Liberalisation on India’s Key Export Sectors: Analysis of the EU–India Free Trade Agreement

Trade agreements are increasingly being negotiated between developed and emerging economy partners. An example is the EU–India Free Trade Agreement (FTA) for which negotiations began in 2007. There has been a debate on the potential effects of the proposed FTA and how this can impact on India’s key export sectors. Our study addresses this aspect from a global computable general equilibrium (CGE) modelling perspective. Using the Global Trade Analysis Project (GTAP) framework, we analyse trade and welfare impacts of the proposed FTA between the EU and India. Two scenarios are modelled: first, complete and immediate elimination of tariff on all goods traded and second, selective tariff elimination on textiles, wearing apparel and leather goods—products in which India has a comparative advantage. Results under both scenarios show that India enjoys positive welfare effects though there is a possibility of trade diversion. Under scenario 1, India loses due to a negative terms of trade (ToT) effect. Under scenario 2, with selective sectoral liberalisation, gains are mainly concentrated in the textiles, wearing apparel and leather sectors. There is a positive output effect from change in demand for factors of production, suggesting that the proposed FTA could lead to relocation of labour-intensive production to India. JEL Classification: F15, F47, F62