Examining the Trade Determinants and Potential of Pakistan: A Gravity Model Analysis

• Published in: Lahore Journal of Economics
• Main Authors: Suadat Hussain Wani, M. Afzal Mir
• Format: Article
• Language: English
• Published: Lahore School of Economics 2024-10-01
• Subjects: Gravity model; panel data; total trade; trade potential; Pakistan
• Online Access: https://journals.lahoreschool.edu.pk/LJE/LJE/article/view/605

This study aims to identify the main determinants of the annual trade flows of Pakistan with its top trade partners, particularly those with which the country has signed trade agreements. Given the current economic conditions of Pakistan, it is crucial to pinpoint the key factors influencing trade to capitalize on global trade openness. In addition to identifying these trade determinants, the study examines the impact of adherence to specific trade agreements. The results indicate that the Free Trade Agreements (FTAs) signed by Pakistan with China and other trade partners have created significant trade opportunities for the participating countries. This underscores the importance of trade liberalization for the long-term development of Pakistan. Furthermore, the trade potential of Pakistan with selected trade partners has also been estimated.