Opportunities for Pakistan’s Exports Growth through OBOR: Case of Central Asian Republics

Abstract

The economic expansion of these large countries generates a boundless prospect for the Central Asia Republics to emerge as a hub for trade and commerce. Especially with trade road development programs such as Western Europe - Western China (WE-WC) International Transit Corridor Project, One Belt One Road Project (OBOR), this paper analyzes the exports of Pakistan to Central Asian Republics. It explores the flaws and opportunities for bilateral trade. The study uses the Constant Market Share (CMS) method for the analysis and estimates World Trade Effect, Markets Distribution Effect, Commodity Composition Effect, and Competitiveness Effect for Pakistan`s exports. The study found that the World Trade Effect and Markets Distribution Effect positively impacted the exports of Pakistan while the Commodity Composition Effect and Competitiveness Effect were causing problems for Pakistan’s export growth for Central Asian Republics Markets. The study concluded that exports of Pakistan are concentrated in a few commodities, such that 45-50% of Pakistan’s overall exports have a lower global export growth rate than other commodities. Also, the exports to Central Asian Republics (from Pakistan) have a growth rate, but still not substantial due to the low share of these commodities (in the total imports of Central Asian Republics). Lastly, an effective exchange rate policy for the Central Asian Republics can minimize this negative effect of the Competitiveness Effect.