WTO AND INDIA PAKISTAN TRADE RELATION

Abstract

In this paper an effort is made to study the impact of WTO on India Pakistan trade relation. The present study is based on secondary data. The annual time series from 1983-84 to 2008-09 is used, which is divided into two sub periods from 1983 to 1995, before WTO and from 1995 to 2008, after WTO. Non -Econometric and Econometric approaches have been used. In non-econometric approach calculation of the chain index, graphs and tabulation, ratios, percentages, growth rates all these techniques were used for analysis. The shares in percentage terms have been calculated. Under econometric approach GDP of three economies are taken as independent variables and bilateral trade flow as dependent variable. The reasons for taken these three variables are to analyze it in context of the size of three economies at large. In this way the model is restricted gravity model of the trade which supported that trade is positively related with the size of the economies and inversely with distance. Simple test of stability of parameters has worked out to know the impact statistically.  It was found that there was not a significant impact of the WTO on the bilateral trade of India and Pakistan.  Following the findings the study recommended that in order to make any policy effective the realization of the mutual benefit from the bilateral trade is important. The study also provides scope that to make any policy effective close economic ties are important for both counties which will not have trade effect but restoration of political stability effect as well.