An Analysis of Pakistan’s Exports using Gravity Model
Assistant Professor, Department of Economics, Abdul Wali Khan University Mardan
Pakistan exports have been showing a declining trend. Pakistan exports have not been only concentrated in trading in few goods but also exporting to a few countries. This study uses a gravity model of trade and panel data estimation technique to explain the export trends of Pakistan. Gross domestic product of the trading partners or economic size of a country (both GDPs and Per capita GDPs) was found to be a statistically significant determinant of trade between the countries. Pakistan’s exports are negatively related to the distance variable. Sharing a border was not found significant for Pakistan’s exports. Disputes over territory and terrorism related incidents with India and Afghanistan making a common border as not significantly explaining the trade. It is suggested that the disputes may be resolved between the neighboring countries and strengthening the regional trade agreements.
Keywords: Exports, Gravity Model, Pakistan