Determinants of Exports of Pakistan: A Country-wise Disaggregated Analysis.

Abstract

Given the importance of international trade and export performance in economic growth, this study attempts to examine the determinants of exports of Pakistan, using a time series data over the period 1975-2008. A simultaneous equation approach is followed and the demand and supply side equations are specified with appropriate variables. This is a country-wise disaggregated analysis of Pakistan versus its trade partners and the estimation strategy is based on two approaches. First we employ the Generalised Methods of Moments (GMM), which is followed by the Empirical Bayesian technique to get consistent estimates. The GMM technique is believed to be efficient for time series data provided the sample size is sufficiently large. In case of small samples, the estimates might not be precise and might appear with unbelievable sign and insignificant magnitudes. To avoid the sample bias and other problems, we employ the Empirical Bayesian technique which provides much precise estimates. The factual results obtained via the GMM technique are a little bit mixed, although most of the coefficients are found to be statistically significant and carry their expected signs. In order to compare and validate these results, the Empirical Bayesian technique is employed. This offers considerable improvement over the previous results and all the variables are found to be highly significant with correct sign across the countries concerned with the exception of a few cases. The price and income elasticities in both the demand and supply side equations carry their expected signs and significant magnitudes for the trading partners. The findings suggest that exports of Pakistan are much sensitive to changes in the world demand and world prices. This establishes the importance of demand side factors like world GDP, Real exchange rate, and world prices to determine the exports of Pakistan. On the supply side, we find relatively small price and income elasiticities. The results reveal that demand for exports is relatively higher for countries in NAFTA, European Union and Middle East regions. The study recommends particular concentration on the trade partners in these regions to improve the export performance of Pakistan. Keywords: Exports, GMM, Empirical Bayesian Method, Pakistan

The Effect of Internal and External Conflicts on the Country Trade and Economic Growth: Case from Emerging and Developed Countries

“…Various research models were specified for the estimation purpose in order to test the relationship of internal and external conflicts with international trade used by Aker (2008) for imports with inclusion of internal and external conflicts and economic freedom used by Singhania and Saini (2017), Afaq and Khan (2016) and Byrne and Fiess (2015). The exports models were adopted from the study of Majeed and Ahmad (2006) and Zada, Muhammad and Bahadar (2011).…”

“…The effect of internal and external conflicts on trade is an interesting and debatable issue which got considerable attention of the researchers, policymakers, country administration and business community. Most of the studies considered the effect of terrorism on the trade and economic growth patterns of the host countries (Jackson, Dixon, & Greenfield, 2007;Blomberg, Hess, & Orphanides, 2004;Gaibulloev & Sandler, 2008, 2011, another stream of studies examined sector specific effect of the terrorism on the economic growth (Drakos & Kutan, 2003;Enders, Sandler, & Parise, 1992) and negative effect of the terrorism and conflicts on the foreign direct investments (Abadie & Gardeazabal, 2008;Bandyopadhyay, Sandler, & Younas, 2014;Enders & Sandler, 1996), whereas there is a negative effect of the conflicts on bilateral trade is examined by Blomberg and Hess (2006); Mirza and Verdier (2014); Nitsch and Schumacher (2004), Magee and Massoud (2011) shows that how trade affect the stability of a country, whereas, Bussman and Schneider (2007); D"Souza ( 2013) examined the effect of conflicts on trade and find significant and negative effect on the trade.…”

“…The study followed the baseline model of Aker (2008) for imports with inclusion of internal and external conflicts and economic freedom used by Singhania and Saini (2017), Afaq and Khan (2016) and Byrne and Fiess (2015). Furthermore, for the exports the model of Majeed and Ahmad (2006) and Zada, Muhammad and Bahadar (2011). The study has followed panel data analysis for the estimation of regression models.…”

“…The study has taken imports and exports in dollars and the same is divided by the gross domestic products in order to have the value in terms of ratios of both import to gross domestic products and exports to gross domestic products (Aker, 2008). Furthermore, the study has also used total trade done in a country and the same is divided by gross domestic products used as a robust measure for the imports and exports (Zada, Muhammad, & Bahadar, 2011).…”

Decomposition of Pakistan’s Export Growth to APEC Markets

“…Naseeb Zada [14] examined the determinants of exports for Pakistan. The study used Generalized Methods of Moments (GMM) and found that exports from Pakistan are sensitive to changes in world demand and world prices on the demand side.…”