EMPERICAL ANALYSIS ON BILATERAL TRADE POTENTIAL OF PAKISTAN WITH MAJOR PARTNERING COUNTRIES

Abstract

The study examined the bilateraltrade potential ofPakistan with its majorpartnering countries. Time series data was usedfor Pakistan's bilateral trade with USA, China, and UK. Data prevailedfrom 1993 to 2018. Data was taken from World Bank and comtrade. For empirical analysis designed three models separatefor each country. Mass is measured usingproduct ofGDP of partner countries anddistance in terms ofphysical distance between two countries. Data on trade volume is taken as addition ofimport andexport data. Analyze the data in its original essence. We used masses, and trade volume between Pakistan and USA as dependent variable, and checked impact ofproduct oftwo distance between two countries on dependent variable. Results suggest that the product oftwo masses have positive significant impact on trade volume, whereas distance had significant negative impact on trade volume between two We used trade volume between Pakistan and China as dependent variable, and checked impact of product countries. oftwo masses, and distance between two countries on dependent variable. Results suggest that the product oftwo masses have positive significant impact on trade volume, whereas distance had significant negative impact on trade volume between two countries. We used trade volume between Pakistan and U.K as dependent variable, and checked impact of product oftwo masses, and distance between too countries on dependent variable. Results suggest that the product oftwo masses have positive significant impact on trade volume, whereas distance had significant negative trade volume between too countries. The model(s) also verified the existence oflong-run relationship by Short-run impact on the help ofARDLf-bound long test, statistical values indicated the existence oflong-run relationship, relationship was alsofound in the model(s) by the help ofECM regression analysis; results indicated strong short relationship in all the models used in the study. Auto regressive distributed lag model (ARDL) was used in the ofthem wasfound stationary on level. The study run study as OLS cannot be performed on any ofthe model(s) recommends the enhancement ofproduction, and re-considering trade policy with neighbors