An Analysis of Determinants of Agriculture Trade Intensities of South Asia

South Asian agricultural trade depends on few sectors in the economy and it exports primary products for limited number of countries. It shows regional outward orientation and thus there is still gaining in agricultural trade in South Asian region. Reinforcement of trade relationships within South Asia will be a solution for that and the study is focused on analyzing agriculture trade intensities in South Asia. Trade intensity measures the level of trade relationships between two nations. The objectives of this study are to calculate the agriculture trade intensities for South Asian countries and to estimate the determinants of trade intensity. Gravity model is used to analyze the determinants in trade intensity and conventional gravity variables, trade agreements and export diversification index are used as the independent variables. Agriculture trade intensities are high in Nepal-Bhutan, Butan-Bangladesh, Pakistan-Afghanistan, and Sri Lanka-Maldives. India shows relatively low agriculture trade intensities with regional members. Though Maldives-Bhutan, Maldives-Bangladesh and Bhutan-Afghanistan are better natural trading partners in the region, their trade is nonexistent as they record zero trade between them. Thus there is still scope for trade negotiations within South Asian region. Export market diversification and trade agreements are the key determinants in trade intensities in South Asia and exporter GDP, population and common colony are the other significant determinants in agriculture trade intensities. As South Asia shows monopolistic nature in agricultural trade, export market diversification is also a possible solutions to strength the agricultural trade relationships within regional members