A Pakistan’s Trade and Trading Partners Using Gravity Model: A Static andDynamic Panel Data
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This paper examines Pakistans trade ?ows using a gravity model for the period 2002-2015. We have selected the following major trade partners: China, UAE, Saudi Arab, United States, Kuwait, Malaysia, Japan, India,Singapore,AfghanistanandIran. Inthisresearch,weemployedstaticanddynamiceconometricapproaches. The results from the two approaches are similar, which showed economic size and distance have played a crucial role in bilateral trade. Furthermore, political globalization was found to be signi?cant and played a vital role during the study period. These variables con?rm that the theoretical models, Pakistan and Pakistan trade partner with economic masses, political globalization, and distance strongly effect trade liaison. Keywords: Trade, Gravity model. Bilateral trade JEL classi?cation: C20, F12.Abstract
This paper examines Pakistan’s trade flows using a gravity model over the period 2002–2015. The study considers Pakistan’s major trading partners, including China, the United Arab Emirates, Saudi Arabia, the United States, Kuwait, Malaysia, Japan, India, Singapore, Afghanistan, and Iran. In this research, both static and dynamic econometric approaches are employed to analyze bilateral trade relationships. The empirical results obtained from the two approaches are similar and indicate that economic size and geographical distance have played a crucial role in influencing bilateral trade flows. Furthermore, political globalization is found to be statistically significant and to have played a vital role during the study period. These variables confirm the theoretical gravity model predictions, showing that trade linkages between Pakistan and its trading partners are strongly affected by economic mass, political globalization, and distance.
Keywords: Trade, Gravity Model, Bilateral Trade
JEL Classification: C20, F12
