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Determinants of Exports of Pakistan: A Country-wise Disaggregated Analysis

Author

Listed:
  • Naseeb Zada

    (International Islamic University, Islamabad)

  • Malik Muhammad

    (International Islamic University, Islamabad)

  • Khan Bahadar

    (International Islamic University, Islamabad)

Abstract

Given the importance of international trade and export performance in economic growth, this study attempts to examine the determinants of exports of Pakistan, using a time series data over the period 1975-2008. A simultaneous equation approach is followed and the demand and supply side equations are specified with appropriate variables. This is a country-wise disaggregated analysis of Pakistan versus its trade partners and the estimation strategy is based on two approaches. First we employ the Generalised Methods of Moments (GMM), which is followed by the Empirical Bayesian technique to get consistent estimates. The GMM technique is believed to be efficient for time series data provided the sample size is sufficiently large. In case of small samples, the estimates might not be precise and might appear with unbelievable sign and insignificant magnitudes. To avoid the sample bias and other problems, we employ the Empirical Bayesian technique which provides much precise estimates. The factual results obtained via the GMM technique are a little bit mixed, although most of the coefficients are found to be statistically significant and carry their expected signs. In order to compare and validate these results, the Empirical Bayesian technique is employed. This offers considerable improvement over the previous results and all the variables are found to be highly significant with correct sign across the countries concerned with the exception of a few cases. The price and income elasticities in both the demand and supply side equations carry their expected signs and significant magnitudes for the trading partners. The findings suggest that exports of Pakistan are much sensitive to changes in the world demand and world prices. This establishes the importance of demand side factors like world GDP, Real exchange rate, and world prices to determine the exports of Pakistan. On the supply side, we find relatively small price and income elasiticities. The results reveal that demand for exports is relatively higher for countries in NAFTA, European Union and Middle East regions. The study recommends particular concentration on the trade partners in these regions to improve the export performance of Pakistan

Suggested Citation

  • Naseeb Zada & Malik Muhammad & Khan Bahadar, 2011. "Determinants of Exports of Pakistan: A Country-wise Disaggregated Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 715-732.
  • Handle: RePEc:pid:journl:v:50:y:2011:i:4:p:715-732
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    Cited by:

    1. Wani, Mr. Nassir Ul Haq & Dhami, Dr. Jasdeep Kaur & Sidana, Dr. Neeru, 2016. "India's trade linkage with BRCS: An econometric study," MPRA Paper 81949, University Library of Munich, Germany, revised 18 Mar 2017.

    More about this item

    Keywords

    Exports; GMM; Empirical Bayesian Method; Pakistan;

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