Agreements Boost Economic Activity
Introduction
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Pakistan has signed many bilateral trade agreements with its regional trading
partners such as
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FTA with Sri Lanka (2005)
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PTA with Iran (2004) and Mauritius (2007)
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FTA with China (2006) and recently joined Shanghai cooperation Organization
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Pakistan and China signed an agreement called Pak-China Economic corridor
(CPEC), a one belt and one route’
It would increase integration , employment opportunities, industrial competitiveness
and welfare of the households working in industries
International/industrial competitiveness refers to the “overall economic
performance”
Introduction



Competitiveness is associated with the ability to achieve higher market
share (Krugman, 1986; Spencer and Brandner, 2008; Lall, 2001)
There is a growing debate in exploring the impact of 3218 km long “China
Pakistan Economic Corridor” on Pakistan’s economy.
This huge economic corridor is expected to bring economic prosperity,
enhanced trade & regional connectivity, infrastructure development etc in
the country.
Pak-China Bilateral Trade
Figure: Pak-China Market Share
Figure: Export to China as % of Pakistan’s Total Exports 2013
Figure: Imports from China as % of Pakistan total Imports
Objectives of the Study
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First direct Microeconometric study (Oliver & Simon, 2006; Micro & Macro) of the
impact of competitive industries on household welfare
Firstly, it measures the industrial competitiveness of Agricultural and non-agricultural
industries (manufacturing) using revealed comparative advantage (RCA) approach
Secondly it assesses the welfare of those households associated with these industries
using semi-parametric propensity score matching (PSM) technique.
Propensity score matching technique (PSM) is used to find the causal effects in
observational (non-randomized) studies
Data Sources
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Primary Source: Micro data
Pakistan Social and Living Standard Measurement survey (PSLM) 2013-14
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Secondary Source: Macro data
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United Nations Commodity trade (UNComtrade) database
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Sample size: 3445 households of Pakistan and
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94 industries (Agriculture & Manufacturing)
Figure: RCA Agriculture Sector by Industry
Other mining and quarrying n.e.c.
Extraction of salt
Mining of chemical and fertilizer minerals
Quarrying of stone, sand and clay
Fishing, aquaculture and service activities incidental to fishing
Forestry, logging and related service activities
Other animal farming; production of animal products n.e.c.
Farming of cattle, sheep, goats, horses, asses, mules and hinnies; dairy
farming
Growing of fruit, nuts, beverage and spice crops
Growing of vegetables, horticultural specialties and nursery products
Growing of cereals and other crops n.e.c.
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Figure: RCA Manufacturing Sector by Industry
Manufacture of sports goods
Manufacture of engines and turbines, except aircraft, vehicle and cycle engines
Cutting, shaping and finishing of stone
Manufacture of refractory ceramic products
Manufacture of coke oven products
Manufacture of wooden containers
Tanning and dressing of leather
Manufacture of wearing apparel, except fur apparel
Manufacture of carpets and rugs
Manufacture of made-up textile articles, except apparel
Preparation and spinning of textile fibres; weaving of textiles
Manufacture of grain mill products
Manufacture of vegetable and animal oils and fats
Processing and preserving of fish and fish products
0
10
20
30
40
50
60
70
80
Results
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The positive and statistically significant ATT coefficient of industrial
competitiveness
On average household welfare increases by [(e0.046– 1) = 4.6%]
it can be concluded that assessment of ex ante treatment effects of
recently signed Pak-China agreement
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would also increase employment opportunities
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would lead to industrial competitiveness and
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Hence economic growth in Pakistan.
Thank you