Do the Preferential Trade Agreements are Economic or Foreign Policy instruments? Evidance from Pakistan

Abstract

Export diversification is one of the important pillars of the trade policy of developing countries. Pakistan has embarked on a geographical export diversification policy by signing preferential and free trade agreements. The gravity model is used to check whether Pakistan’s policy of preferential trade has a positive impact on its export growth. The estimation results indicate an insignificant relationship between preferential trade and export growth, and therefore implies that the agreement may have international political significance but not the economic.

DOI: 10.7176/JESD/10-24-15

Publication date: December 31^st 2019