Free Trade Agreements and International Trade Flow of Pakistan: the Gravity Modelling Approach

Authors

  • Shujaat Abbas Department of Economics, Institute of Business Management, Karachi, Pakistan.

DOI:

https://doi.org/10.14666/2194-7759-7-2-005

Keywords:

free trade agreements, export flow, imports flow, economic integration, gravity model, panel data

Abstract

This study explores the effect of regional and bilateral free trade agreements on international trade flow of Pakistan with respects to 47 global trading partners from 1980 to 2016 using log-linear panel generalized ordinary least technique on augmented gravity equations. The result of the standard gravity equation is consistent with the theory of the model. The findings of the augmented gravity models revealed that the SAFTA have a significant negative effect in both export flow and import flow indicating lower trade creation among regional countries. The findings of bilateral free trade agreements with China, Malaysia, and Indonesia revealed a significant positive effect on import flow; whereas, insignificant and/or negative effect is observed in exports flow. The FTA with Sri Lanka and the USA revealed the negative effect on import flow with a positive effect on bilateral export flow. Pakistan should revisit these free trade agreements and renegotiate for corresponding market access.

Author Biography

Shujaat Abbas, Department of Economics, Institute of Business Management, Karachi, Pakistan.

Dr. Shujaat Abbas is associated with the Institute of Business Managment, Karachi, Pakistan, as an assstant Professor  at Department of Economics. His research interest lies in the international economics, development economics, industrial economics and competitiveness.

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Published

2019-02-12

Issue

Section

Papers