Export, Import and Total Trade Potential of Pakistan: A Gravity Model Approach

This paper aims to find export, import and total trade determinants and potential of Pakistan by using augmented gravity model. Panel data for the period ranging from 2000 to 2013 across 38 countries has been used for analysis. The results obtained from gravity model confirms that export and import determinants are different from total trade determinants. Similarly, export and import potentials of Pakistan are different from total trade determinants. Pakistan has highest trade potential with Norway and Hungry while for exports the highest potential exist with Switzerland and Hungry and in case of imports Pakistan has highest potential with Norway followed by Philippines, Portugal and Greece. Border sharing countries offer lower transportation cost due to minimum distance as compared to non-border sharing countries. China and India are two major border sharing countries but only with China, Pakistan has exhausted its trade potential (both export and import potential)