"Paper Title: International trade driven growth pattern in India, Pakistan and Sri LankaABSTRACTThe purpose of this study is the comparative analysis of the Marshall-Lerner Condition in India,Pakistan, and Sri Lanka for the time period 1985-2013. Also, to show an empirical verification ofthe Marshall – Lerner condition.As the recession is prominent in the developed and thedeveloping countries, therefore, this condition can provide respite in the form of path to befollowed to arrest recession. In order to analyze this condition, five variables are taken in thisstudy namely; Exports, Imports, GNI, Exchange Rate and the World Income .The annual data iscollected from the World Bank database. All these variables are tested for stationary and then forco integration via SAS and finally OLS technique has been implied in order to find the importand export elasticity. The condition is tested separately for India, Pakistan and Sri Lanka andthen the comparisons are drawn. The results show that this condition is satisfied in all 3 countriesbut there are still certain important differences in the scenarios in the countries which led to thejustification of the Marshall-Lerner condition. All these findings are supported with the empiricalanalysis using the available data. This study will be helpful to determine the trends in the tradeand future research can be done to suggest the various changes which will help the country todevelop international trade.Keywords:Balance of Payment, Marshall-Lerner condition, Depreciation, Export elasticity,Import Elasticity1. INTRODUCTIONIn today’s world the problem of depression and recession is faced by not only the developing countries butalso by the developed countries. As a result of which there occurs deficit in the Balance of Payment. If acountry’s currency depreciates (under a floating regime) or is devalued (under a fixed system) this shouldlead to an improvement in the economy’s current account position if Marshall-Lerner Condition issatisfied. A depreciation/devaluation will lead to a fall in the price of exports and a rise in the price ofimports. Theory would suggest that demand for exports will rise and the demand for imports would fall,hence the improvement in the current account. Whether this improvement in the current account happensdepends upon the price elasticity of demand for exports and imports. Also, there is a time lag involvedbetween when the depreciation takes place and when the improvement starts in BOP. This pattern of theBOT is depicted in the form of J-curve. Marshall- Learner has given the most useful insight on how canthe Balance of Payment be improved in such situation. d d? + ? > 1 x m Where,d? is price elasticity of demand for exportsx d ? is price elasticity of demand for importsm dThis condition says that if the sum of price elasticity of demand (? ) for export and price elasticity ofx d demand for import ( ? )is greater than 1, only then the Balance of Trade will improve. This conditionm tells us whether the foreign exchange market is stable or unstable. If this equation is satisfied then theforeign exchange is stable and if this sum is less than 1 then the market is unstable and is it is equal to 1,then the change in exchange rate will leave the Balance of Payments unchanged.However, the overall effect of the devaluation or the depreciation has an effect on the BOP of a country inthree ways: "