IMPACT OF CHINA-PAKISTAN REGIONAL TRADE AGREEMENT ON PAKISTAN’S EXPORTS: An Analysis Using Gravity Trade Model

Abstract

This study aims to analyze the impact of the China-Pakistan Regional Trade Agreement on Pakistan’s exports. We applied the gravity trade model using the Poisson Pseudo Maximum Likelihood (PPML) estimator for export data for a period of 16 years from 2003 to 2018. For the sake of a comprehensive analysis, ten products at the HS-4 level are studied. The estimates show expected signs for all traditional variables of the gravity equation, including GDP, bilateral distance, colonial relationship, language commonality and landlocked importing countries. The results show a consistent and significant positive impact of the RTA on Pakistan exports.

Keywords

• regional trade agreements
• gravity trade model
• ppml
• exports
• pakistan.