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Title Determinants of Trade Cost of Agriculture and Manufacturing Sectors of Pakistan

Author(s) Nadia Mehmood

Abstract Trade cost is considered as a driving force of bilateral trade pattern, thus impede economic integration. Trade cost forms a potentially imperative barrier to trade. Higher trade costs are an obstacle to trade and lessen the gains from trade. Determinants of trade costs of Pakistan with its leading export partners: Bangladesh, China, India, Italy, Korea, Kenya, Turkey, Saudi Arabia and Sri Lanka are investigated for the period of 2002-2017. Some gravity model variables are deployed for analysis of determinants of trade cost. For agricultural and manufacturing sectors, trade cost is calculated by applying a micro founded trade costs measure. Estimation results of the analysis indicate that trade costs equivalents show a decreasing trend during the period of study. Estimated generalized least square model indicates that tariff, inflation and distance raises the bilateral trade costs; whereas, advancement in port infrastructure and devaluation of exchange rate reduce bilateral trade costs significantly. The comparative results also indicate that trade cost for agriculture sector of Pakistan is higher as compared to manufacturing sector. The study recommends that effective policy measures should be taken to reduce trade cost for agriculture exports specifically. Bilateral tariff and inflation need to be lessened to promote trade. Keywords: Trade costs, Gravity model, LSCI, exchange rate, Pakistan

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Economics

Language English

Publication Date 2020-11-24

Subject Economics

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