Economic reforms and trade liberalisation policies have been widely adopted in developing countries in recent years. Pakistan is no exception. This paper focuses on the effects of economic reform policies on the agricultural export performance. A number of studies have investigated the effects of trade liberalisation on export growth in developing countries, and have reached inconclusive results. Some studies have identified positive effects of trade liberalisation on export performance [Krueger (1997); Bleaney (1999); and Ahmed (2002)], others confirmed an insignificant or even a negative relationship [Greenaway, et al. (1994); Jenkins (1996) and Greenaway, et al. (2002)]. There are number of reasons for conflicting conclusions including different researchers have used different indicators for liberalisation and different methods to analyse the effect; difference in the extent of liberalisation studies; most studies have analysed scenarios rather than evaluating the effects, and so on.

Agriculture is the mainstay of the most developing countries, which supplies food and employment to the majority of the population. Because of the dominance of the agricultural sector, a sufficient supply of domestic food is indispensable to support stable socio-economic and political systems in these countries. To attain a sustained growth of agricultural productivity, sufficient investment in the agricultural sector is crucial, particularly in the initial stages of economic development. This increases agricultural production and as a result, there is a shift in (human) resources from the agricultural sector to the industrial and services sectors. According to Duranton (1998), in order to transform from agricultural sector to industrial sector a significant increase in the agricultural sector productivity is necessary. On the demand-side, the growth in agricultural production increases agricultural income which leads to increase in the demand for industrial products; whereas on the supplyside, the increase in the agricultural productivity shifts human resources from the agricultural to the industrial sector [Jorgenson (1967)].