Trade Policy of Pakistan

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- Trade integration with South Asia, China and the Economic Cooperation Organization countries is likely to increase the volume of trade flows across our land borders.

- Our borders at land ports lack world class trade facilities. In order to transform our land ports into efficient facilitators of trade while simultaneously being responsive to security issues and smuggling, human.

Setting up of Exim Bank:

- with the help of provincial governments, this bank would not only provide export credit, it would also provide supplier’s credit and export credit guarantees.

Promotion of services sector exports:

- To tap the enormous potential of export of services, especially to Asia, it has been decided to establish a Services Trade Development Council in collaboration with the relevant sectors.

Creating regulatory efficiencies:

- A Resource Management Unit in the Ministry of Commerce and an International Trade Dispute Arbitration Council will be established.

- It would give the country a more efficient, time saving and relatively inexpensive mechanism for trade dispute resolution.

DETERMINANTS OF EXPORTS IN DEVELOPING COUNTRIES

To determine the importance of Export for development countries a study carried out by Pakistan Institute of Development Economics are referred , as per report,

According to the orthodox classical economist as well to the modern liberal view trade is equivalent to an engine of economic growth. Exports promotion strategy is often in accordance with the principle of comparative advantage, when a country specialises in a product, which it can produce competitively. The goods become available to the community of the world at cheaper prices. The markets are extended. The internal and external economies are attained. Income and employment levels expand. Consequently process of economic development is facilitated. In a nutshell, putting more emphasis on the promotion of exports would permit the optimal allocation of world resources and, therefore, returns from trade sector depend upon accelerating growth of exports

Production Growth

Growth of the GDP is an indicator of future potential and sustainability of production level. Growth is more valid determinant of exports as compare to GDP because it measures the sustainability of output levels. So we expect positive impact of GDP growth on exports expansion.

CONCLUSION

The objective of this study has been to find out the main factors that are important in the determination of exports in developing countries. For this purpose the study used a fairly large sample of panel observations for 75 developing countries over the period 1970-2004. The data are derived from the World Development Indicators (WDI) 2005

Fixed effects (country specific intercepts) model is employed for the estimation of the relationship of exports with its potential determinants based on the panel data. A number of conclusions can be drawn from the study, which are summarised as follows.

- It is of critical importance to maintain a high and sustainable economic growth rate. Evidence has shown that a sustainable growth patterns promotes exports.

- Development of the net of communication facilities is crucial not only in promoting economic growth, as is well known, it is also important for sustained exports performance. This finding strength hens the case for subsidising the communications industry.

- A stable exchange rate policy has to be ensured in order to avoid the exchange-rate risks associated with the assets, import prices and profit considerations of direct investor in developing countries.

- Developing countries need to replace agriculture exports by the industrial exports, which command reasonable and stable prices in the world markets. Moreover, the industrialisation will reduce dependence on imports by initiating the process of import substitution.

Refrence:http://www.pide.org.pk/pdf/PDR/2006/Volume4/1265-1276.pdf

SERVICES SECTOR

Services sector is largest and fastest growing sector in the world economy, accounting largest share in total output and employment in most developed countries. The share of services sector in total GDP is 47 percent in low income countries, 53 percent in middle income countries and 73 percent in high income countries.

In case of Pakistan, the shares of services are increasing in all sectors of economy over the period. In fact, the growth rate of services sector is higher than the growth rate of agriculture and industrial sector. Services sector accounts for 54 percent of GDP and little over one-third of total employment. Services sector has strong linkages with other sectors of economy; it provides essential inputs to agriculture sector and manufacturing sector.

Classification of Services Sector in Pakistan

- Distributive Services

Transport, Storage and Communications

- Railways

- Water Transport

- Air Transport

- Pipeline Transport

- Road Transport

- Mechanized

- Non- Mechanized

- Communications

- Storage

- Water Transport

Wholesale, Retail Trade and Hotels and Restaurants

- Wholesale and Retail Trade including Imports

- Purchase and Sale Agents and Brokers

- Auctioning

- Producer Services

Financial Institution

- State Bank of Pakistan

- Commercial Bank

- Other Financial Intermediaries

- Insurance Corporations and Pension Funds

- Social Services

Public Administration and Defense

Social