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Recent Experience and Future Prospects of Pakistan’s Trade with China

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Author Info

  • Musleh-ud Din

    ()
    (Pakistan Institute of Development Economics, Islamabad, Pakistan.)

  • Ijaz Ghani

    ()
    (Pakistan Institute of Development Economics, Islamabad, Pakistan.)

  • Usman Qadir

    ()
    (Pakistan Institute of Development Economics, Islamabad, Pakistan.)

Abstract

This paper examines the prospects of expanding bilateral trade between Pakistan and China particularly in the context of the recently signed free trade agreement between the two countries. Using the augmented gravity model in the tradition of Rose (2004), the paper shows that there is significant potential for the expansion of bilateral trade between the two countries as a result of the free trade agreement. The paper also analyzes bilateral trade flows between the two countries in terms of a trade specialization index and the Grubel-Lloyd index of intra-industry trade. We show that bilateral trade between the two countries is heavily tilted in favor of China and that this situation may persist in the short term.

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Bibliographic Info

Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

Volume (Year): 14 (2009)
Issue (Month): Special Edition (September)
Pages: 87-110

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Handle: RePEc:lje:journl:v:14:y:2009:i:sp:p:87-110

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Related research

Keywords: Pakistan; bilateral trade; growth.;

References

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  1. Andrew K. Rose, 2002. "Do We Really Know that the WTO Increases Trade?," NBER Working Papers 9273, National Bureau of Economic Research, Inc.
  2. Amable, Bruno, 2000. "International specialisation and growth," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 413-431, December.
  3. Yeats, Alexander J., 1998. "Just how big is global production sharing?," Policy Research Working Paper Series 1871, The World Bank.
  4. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
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