TRADE LIBERALIZATION IMPACT ON PAKISTAN’S IMPORT: THE ECONOMETRIC EVIDENCE
Utilizing the alternative econometric tools, this study analyzed for the impact of trade liberalization on Pakistan’s real import demand during the period of 1981-2010. Whereby extend the standard import demand by including import duties ratio and alternative dummies for high liberalization episodes. In results provide new trade elasticity estimates i.e. real income of the country follows by relative import prices largely explains the country’s demand for imports with expected positive and negative signs respectively. Further, depicts that reforms in trade policy in favour of trade liberalization has encouraged significantly Pakistan’s imports demand during the period.
Afzal, Mohammad. (2001), ‘Import Function for Pakistan¬A Simultaneous Equation Approach”, The Lahore Journal of Economics, 6(2), pp. 109-116.
Afzal, M. (2004), ‘Estimating Long Run Trade Elasticities in Pakistan- Co-integration Approach’, The Pakistan Development Review, 43(4), pp.757-770.
Afzal, M. (2007), ‘Exchange Rate Response of Import Demand in Pakistan, Sarhad J. Agric. Vol. 23, No. 4, pp. 1181-1186.
Bahmani-Oskooee, M. (1998), ‘Co-integration Approach to Estimate the Long Run Trade Elasticities in LDCs’, International Economics Journal, 12(3), pp. 89-96.
Baig, M.Q (2009), ‘Pakistan’s Trade Policy, 1999-2008: An Assessment’, PIDE Working Paper, 2009: 55.
Chang, T., Ho, Y., and Haung, C. (2005), ‘A Reexamination of South Korea’s Import Demand Function: The Bound Test Analysis’, Journal of Economic Development, Vol. 30 (1), pp. 119-128.
Chani, I. M., Pervaiz, A. and Chaudhary, A. R. (2011), ‘Determination of Import Demand in Pakistan: The Role of Expenditure Components’, Theoretical and Applied Economics, Volume XVIII, No. 8(561), pp. 93-110.
Dash, A. K. (2005), ‘An Econometric Estimation of the Aggregate Import Demand Function for India’, IBRC Athens 2005,
Din, M., E. Ghani and Siddique, O (2003), ‘Openness and Economic Growth in Pakistan’, The Pakistan Development Review, 24(4), pp. 795-807.
Engle, R.F. and Granger, C.W.J. (1987), ‘Co-integration and Error Correction: Representation, Estimation and Testing’, Econometrica, 55, pp.251-276.
Felipe, J., McCombie, J. S. L. and Naqvi, K. (2010), ‘Is Pakistan’s Growth Rate Balance of Payments Constrained Policies and Implications for Development and Growth, Oxford Development Studies, 38(4), pp. 477-496,
Fida, B. A, Khan, M. M, and Sohail, M. K. (2011), ‘Revisiting Aggregate Import Demand Function in Pakistan using ARDL Methodology’, American Journal of Scientific Research, Issue 33(2011), pp. 5-12,
Fullerton, T. M., Sawyer, W. C. and Sprinkle, R. L, (1997), ‘Functional form for United States-Mexico Trade Equations’, EECO, 12 (1), pp. 23-35.
Goldstein, M. and Khan, M. S. (1985), ‘Income and Price Effects in Foreign Trade’, in Constant, N. B. Z. S. and Yue, Y. (2010), ‘An Econometric Estimation of Import Demand Function for Cote D’Ivoire’, International Journal of Business and Management, Vol. 5, No. 2, pp. 77-84.
Government of Pakistan, (Various Issues), ‘Economic Survey’, Ministry of Finance, Islamabad,
Government of Pakistan (Various Issues), ‘FBR Year Book’, Ministry of Commerce, Islamabd,
Ho, W.S. (2004), ‘Estimating Macao’s import demand functions’, monetary authority of Macao,
Khan, Ashfaque, H. (1998), ‘The Experience of Trade Liberalization in Pakistan’, The Pakistan Development Review, 37: 4, pp. 661-685.
Khan, S., Ali, R. and Shah, M. (2013), ‘Import’s Price and Income Elasticity Estimates: Reconsidering the Evidence for Pakistan’, Research Journal of Economics and Business Studies, Vol. 2, No. 4, pp. 1-7,
Khan, S. A., Khan, S. and Zaman, K. (2013), ‘An Estimation of Disaggregate Import Demand Function for Pakistan’, World Applied Sciences Journal, 21 (7), pp. 1050-1056,
Masih, R. & Masih, A. M. M. (2000), ‘A Re-assessment of long-run elasticities of Japanese Import Demand. Journal of Policy Modeling, 22, 625-639.
Narayan, P.K., (2004), ‘Reformulating critical values for the bounds F-statistics approach to cointegration: an application to the tourism demand model for Fiji’, Department of Economics Discussion Papers N0.02/04, Monash University, Melbourne.
Nenci, S. and Pietrobelli, C. (2007), ‘Does Tariff Liberalization Promote Trade Latin America in the Long Run (1900-2000)’, CREI Working Paper, No. 4/2007,
Opoku-Afari, M. (2004), ‘Measuring the Real Effective Exchange Rate (REER) in Ghana’, CREDIT Research Paper, No. 04/11, University of Nottingham.
Ozturk, I, and Acaravci, A. (2010), ‘An Application of Thirwall’s Law to the South African Economy: Evidence from an ARDL Bounds Testing Approach’, African Journal of Business Management, Vol.4, pp. 262-266.
Pacheco-Lopez (2003), ‘The Effect of Trade Reforms on Mexico’s Imports’, ECOMOD 2003 International Conference in Policy Modeling, July 2003, Istanbul, Turkey.
Pesaran, M.H, Shin, Y. & J. S.R. (2001), ‘Bound Testing Approaches to the Analysis of Level Relationship’, Journal of Applied Econometrics, 16, pp. 289-326.
Rehman, H.U. (2007), ‘An Econometric Estimation of Traditional Import Demand Function for Pakistan’, Pakistan Economic and Social Review, Vol. 45, No. 2, pp. 245-256.
Reinhart, C. (1995)’, Devaluation, Relative Prices and International Trade’, IMF Staff Papers, Vol.42, pp. 290-312.
Santose-Paulino, A. (2001), ‘The Effects of Trade Liberalization on Imports in Selected Developing Countries’, World Development, pp. 959-974.
Santose-Paulino, A. and Thirlwall, A. P. (2004), ‘The Impact of Trade Liberalization on Exports, Imports and the Balance of Payments of Developing Countries’, The Economic Journal, 114 (Feb), pp. 50-72
Senhadji, A. (1998), ‘Time Series Estimation of Structural Import Demand Equations: A Cross Country Analysis, IMF Staff Papers, 25(2), pp. 236-268.
Shabir, T. and Mahmood, R. (1991), ‘Structural Change in the Import Demand Function for Pakistan’, The Pakistan Development Review, Vol. 30, No. 4, pp. 1159-1168.
Shareef, R. and Tran, V. (2007), ‘An Aggregate Import Demand Function for Australia: A Co-integration Approach’, Working Paper No. 0708, Edit Cowan University.
State Bank of Pakistan, ‘A Handbook of Statistics, October 2010’ SBP,
World Bank, World Development Indicators, (www.databank.worldbank.org)
Wu, Y. and Zeng, L. (2008), ‘The Impact of Trade
Liberalization on the Trade Balance of Developing Countries’, IMF Working Paper, WP/08/04.
Yasmin, B., Jehan, Z. and Chaudhary, M. A. (2006), ‘Trade Liberalization and Economic Development: Evidence from Pakistan’, The Lahore Journal of Economics, 11 (1), pp. 19-34.