The trade-enhancing effects of free trade agreements in south asia : evidence from Pakistan | |
| Author | Mahmood, Farhat |
| Call Number | AIT Diss. no.SM-18-01 |
| Subject(s) | Free trade--Asia, South Free trade--Pakistan |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Management |
| Publisher | Asian Institute of Technology |
| Abstract | This study examines impacts of in-effect Free Trade Agreements (FTAs) on exports and imports of Pakistan using the extended gravity model of bilateral trade flows. The effects of FTAs are measured by finding the difference between MFN and preferential tariff rates (the tariff gap) as well as the zero-one binary dummy variable. To deal with zero export flows, our econometric procedure in this study uses the method of Santos Silva and Tenreyro (2006) where dependent variable is the level of (real) export and import value whereas other independent variables are in logarithm. Poisson pseudo-maximum likelihood (PPML) estimation is employed to avoid possible bias and inconsistent estimators as a result of using OLS estimation in the presence of heteroskedasticity problem. Negative binomial (NB) model, where the conditional mean and variance of the distribution are not necessarily equal has also been used as a robustness check. Our systematic comparison of both the measures of an FTA suggests that the estimation based on the tariff gap is consistent with the observed changes in the trade pattern of Pakistan. Results with Pakistan as an exporter suggest that Pakistan-China Free Trade Agreement (PCFTA) has the largest stimulating effect for Pakistan’s exports while the effects of other FTAs are much smaller and not much different from each other. The effects of FTAs on agricultural products tend to be higher than manufacturing sector products, suggesting ability of firms to comply with imposed rules of origin in former sector is better than the latter one. On the other hand, results with Pakistan as an importer suggest that among six in-effect FTAs of Pakistan, only FTAs with Malaysia (PMFTA) and China (PCFTA) have the positive impact on Pakistani imports. In agricultural imports, PIPTA (FTA with Iran) is the most important FTA for Pakistan; followed by PMFTA and PCFTA. However, for manufacturing imports, it is PMFTA and PCFTA have the largest significant effect. At the 1-digit SITC, the effect of FTAs is mixed across products and FTAs. The positive effect is mostly found for PMFTA and PCFTA and the coefficients tends to be high in SITC 4, 5 and 6 where most products are raw materials/production inputs. |
| Year | 2018 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Doctor of Philosophy in Management (Publication code = SM) |
| Chairperson(s) | Juthathip Jongwanich |
| Examination Committee(s) | Chotchai Charoenngam;Badir, Yuosre; |
| Scholarship Donor(s) | Higher Education Commission (HEC), Pakistan;AIT Fellowship; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 2018 |