Economic Globalization and Consumption Convergence: The Case of Pakistan

Abstract

This paper attempts to examine the relationship between convergence in taste across countries and economic globalization. Consumption expenditure patterns are linked to the volume of bilateral trade and foreign direct investment for Pakistan with relation to three major trade partners over the last twenty years. Using household consumption expenditure data for six specific commodity groups, it is seen that the differences in consumption patterns between Pakistan and its major trading partners have reduced over time. An extensive study into the demand for each commodity reveals that FDI and Trade are meaningful in explaining taste convergence between Pakistan and its major trade partners in expenditure of only two commodities out of six.