Evaluating the Impacts of Oil Prices, Macroeconomic Variables and Political Regimes on Pakistan’s Exports Using Quantile Regression

Abstract

This thesis explores the complex connection between Pakistan’s exports and various influential factors, including crude oil prices, foreign direct investment (FDI), gross domestic product (GDP), imports, inflation, exchange rates, political regimes, and global shocks. Spanning the time from 1970-2022, the study employs a bivariate approach known as Quantile Regression to discern the individual impact of these variables on Pakistan’s export performance. The findings reveal that crude oil prices, FDI, GDP, imports, and exchange rates all exhibit a significant positive influence on export levels. This suggests that increased crude oil prices, FDI inflows, higher GDP growth, amplified imports, and a favorable exchange rate contribute to the expansion of Pakistan’s exports. Interestingly, the analysis demonstrates that inflation has an insignificant impact on exports across all quantiles. By taking political regimes and shocks as dummy variables , it has been found that political regimes exhibit a significant impact on exports, but only at one specific quantile and showed alternating positive and negative trends across different quantiles, while shocks, though insignificant across all quantiles have too, shown both positive and negative trends.