This research study attempts to explore the effect of a trade war between the United States of America and China on Pakistan and other regional countries exports to the United States of America. The difference-in-difference methodology used to obtain the coefficients of each country to estimate the change in exports to the US from China, India, Bangladesh, and Pakistan. The empirical results indicate that due to the imposition of US tariffs, China�s exports to the US reduced by 39%, whereas Pakistan�s exports to the US lowered by 3%. India and Bangladesh, on the other hand, gains from the trade war with India�s exports increased by 39% and Bangladesh�s exports increased by 50%. Therefore, it can conclude that the US-China trade war does not bring positivity to overall Pakistan�s trade position.
Pakistan and Russia have a history of divergence and ambiguity in their foreign policies. Since Independence Pakistans policy towards Russia remained complex and contradictory. Historically there were highs and lows in their relationship, but uncertainty prevails in their approaches. This was due to Pakistans western inclination and Russias pro-India alliance. However, the relationship was revitalized in the last 2 decades as both states see strategic interest in improving the relationship. Russia has started to exert itself as a superpower in the current geopolitics whereas Pakistan has also managed to improve its status as a regional player with respect to geostrategic location, its proximity to hot waters and its role in Afghanistan. However, Pakistans foreign policy realignment took 50 years to adjust to improve the Pak-Russia relationship. One needs to assess the determinants of Pakistans foreign policy with respect to Russia with historical contradictions and current reality.
Worldwide trade plays a significant part in encouraging Pakistan's economic growth and development. For further enhancing the trade, the concerned quarters or authorities have dynamically grown the number of free trade agreements with its trading nations. However, there are various reasons for the surge of RTAs/FTAs worldwide. In this study, we estimated the trade efficiency of Pakistan's exports and imports and its determinants. The stochastic gravity model was used with data from 13 countries starting from 1981 till 2018. The results suggest Pakistan's trade is much below its true potential. The trade efficiency of exports contributed more as compared to the trade efficiency of imports. The average trade efficiency of exports stands at 36% which is still lower than the potential. This implies that Pakistan needs to explore new markets and develop value-added products to achieve 100% efficiency. The average efficiency of imports of 20% reflects a lower contribution of trade within SAARC countries and others. The study further explores that reducing trade barriers and may lead to an increase in trade efficiency.
The current study investigates the real influence of the rate of exchange in real terms, GDP in real terms, money supply and infrastructure on the balance of trade in Pakistan by employing Johnson co-integration and ECM. The real GDP and infrastructure positively affected mini missing the gap of trade deficit to improve the trade performance of the economy of Pakistan.In contrast, the factor of effective exchange rate and money supply negatively affected on trade deficit of the country. The rate of R-Square is 0.85, it tells that 85 percent variation in the balance of trade is captured by independent variables.The important recommendation of this research is that the exchange rate should be stable and consistent with the equilibrium path. The negative ECM value of -40 obviously pointed out that there is a 40 percent convergence of the total said parameters in mini missing the gap of trade deficit for the economy of Pakistan.
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