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

Author

Listed:
  • 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.

Suggested Citation

  • Musleh-ud Din & Ijaz Ghani & Usman Qadir, 2009. "Recent Experience and Future Prospects of Pakistan’s Trade with China," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(Special E), pages 87-110, September.
    • Handle: RePEc:lje:journl:v:14:y:2009:i:sp:p:87-110
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    References listed on IDEAS

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    1. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
    2. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    3. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    4. Yeats, Alexander J., 1998. "Just how big is global production sharing?," Policy Research Working Paper Series 1871, The World Bank.
    5. Amable, Bruno, 2000. "International specialisation and growth," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 413-431, December.
    6. 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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    Citations

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    Cited by:

    1. Mitchell Kellman & Mitchell Yochanan Shachmurove, 2012. "Trade Sophistication in a Transition Economy: Poland 1980–2009," Working Papers 64, Department of Applied Econometrics, Warsaw School of Economics.
    2. Ejaz Ghani & Musleh ud Din & Afia Malik, 2017. "An Assessment of Pakistan's Export Performance and the Way Forward," Working Papers id:12173, eSocialSciences.
    3. Afia Malik & Ejaz Ghani & Musleh ud Din, 2017. "An Assessment of Pakistan’s Export Performance and the Way Forward," PIDE-Working Papers 2017:153, Pakistan Institute of Development Economics.

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