Abstract:
Trade costs are cited as an important determinant of volume of trade. Higher trade cost is an
obstacle to trade as it impedes the realization of gains from trade liberalisation. Determinants of
trade costs of Pakistan for the period 2003-2012 with its major trading partners across Asia,
European Union and North America are investigated. Several gravity type variables have been
used as determinants of trade costs. Trade costs for agricultural and non-agricultural sector are
also calculated using a micro-founded trade costs measure. Estimates of trade costs equivalents
show a declining trend of trade costs estimates over the period of study. Fully Modified Ordinary
Least Square estimation of the model shows that tariff rates and distance between the trading
partners increase the bilateral trade costs and thus adversely affect trade. Results show that
improvements in port infrastructure and membership of free trade agreement significantly reduce
the trade costs. Z-test shows that the effect of determinants of trade costs for agricultural and
non-agricultural sectors is invariant. Some policy implications are also discussed.
Description:
Supervisor:
Dr. Zafar Mahmood.
Professor of Economics,
School of Social Sciences & Humanities,
NUST, H-12 Islamabad.
