DETERMINANTS OF LEATHER EXPORTS FROM PAKISTAN: A TIME SERIES ANALYSIS

This paper attempts to evaluate impact of major factors affecting leather exports from Punjab, Pakistan employing secondary sources of data. For time series analysis, data (1980 to 2010) were collected from various sources and used to develop an export supply function at macro-level. The value of the finished leather exports from Pakistan was taken as dependent variable, whereas export price, real exchange rate, trade openness and number of animal skins and hides were taken as independent variables. Co-integration analysis and Error Correction method were employed to estimate short and long run elasticities. According to the findings, exchange rate showed a negative effect on exports of finished leather. The coefficient of this variable explains that for every one percent increase in exchange rate there might be 5.2 percent decrease in exports of finished leather in the long run. In the similar context, Real GDP, share of semi manufactured goods exports and trade openness showed effect of 3.1, 0.72 and 2.4 percent increase in the export supply of finished leather in the long respectively. Export prices showed negative relationship with value of finished leather exports. The coefficient of this variable suggested that for every one percent increase in the export prices there might be -3.5 percent decreases in the export supply of finished leather in the long run. Based upon the findings, it is suggested exchange rate of Pakistani rupee should be stabilized with strengthening industry of semi manufactured leather goods in the country