Recent Experience and Future Prospects of Pakistan’s Trade with China
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.
Volume (Year): 14 (2009)
Issue (Month): Special Edition (September)
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- Rose, Andrew K, 2002.
"Do We Really Know that the WTO Increases Trade?,"
CEPR Discussion Papers
3538, C.E.P.R. Discussion Papers.
- Amable, Bruno, 2000. "International specialisation and growth," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 413-431, December.
- Yeats, Alexander J., 1998. "Just how big is global production sharing?," Policy Research Working Paper Series 1871, The World Bank.
- Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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