The effect of preferential trade agreements on Pakistan's export performance

The main objective of this study is to investigate empirically the effect of free or preferential trade agreements (PTAs) on Pakistan's export performance (value of exports, number of exporters and number of products per exporter) during the period 2003 to 2010. The analysis covers the South Asian Free Trade Area (SAFTA) and five bilateral PTAs with China, Sri Lanka, Malaysia, Iran and Mauritius. Data from the World Bank Exporters Dynamics Database are analysed using fixed effect panel data techniques. The SAFTA and PTAs with China and Iran are associated with improved export performance in terms of value of exports and number of exporters. There is no evidence that the bilateral PTAs with Sri Lanka and Mauritius affect export performance of Pakistan. There is some evidence for product diversification under the PTAs with Malaysia and Mauritius, whereas with Sri Lanka and China product diversification declined.