Who is Trading Well with China? A Gravity and Constant Market Share Analysis of Exports of Pakistan and ASEAN in the Chinese Market

Abstract

This paper empirically investigated the trade competitiveness and trade potential of Pakistan and ASEAN countries in the Chinese market. The study utilizes trade data for the period of 2003–2019 to assess the bilateral trade aspects by using an extended gravity equation. In addition, the PPML model and constant market share analysis are applied to examine trade potential and competitiveness, respectively. Market size, distance, trade openness, revealed comparative advantage position and common border play an important role in bilateral trade of Pakistan and ASEAN with China, and coefficients of all these variables comply with the economic theory and are statistically significant. Pakistan along with Brunei, Cambodia, Laos, Myanmar, Philippines, and Thailand has great trade potential in the Chinese market. Particularly Cambodia and Vietnam are enjoying the highest competitive advantage as compared to other ASEAN countries. Pakistan’s export performance in China’s market relies on the market distribution effect. Based on this study, we have discussed country-specific future policy discourse for Pakistan and ASEAN countries in detail.

Does revealed comparative advantage matter in the gravity of FTAs?

“…This study intends to fill the gap in the literature on trade liberalization by integrating RCA with the gravity model. As mentioned earlier in the section literature review, previous studies (Abdul Kamal et al. , 2021; Ariza Marin, 2020; Ciuriak and D.and Kinjo, 2006; Guglielmo et al.…”

“…This study intends to fill the gap in the literature on trade liberalization by integrating RCA with the gravity model. As mentioned earlier in the section literature review, previous studies (Abdul Kamal et al, 2021;Ariza Marin, 2020;Ciuriak and D.and Kinjo, 2006;Guglielmo et al, 2015;Shakur and Tsang, 2017) interleaved the indicator of RCA into the gravity equation instead of adopting a sequential model, which will be more suitable to perform and join the RCA and gravity model together for the FTA agreement. The objective of this study was to identify the commodities in which the two countries have a robust RCA separately and then analyze the effect of FTA on the export value of those commodities for the bilateral trade between the two countries.…”

“…In addition, the existing literature exhibits few studies only that ponder to connect the RCA with the gravity model like Abdul Kamal et al, 2021;Ariza Marin, 2020;Ciuriak and D.and Kinjo, 2006;Guglielmo et al, 2015;Shakur and Tsang, 2017. However, there is a gap in the existing literature vis-a-vis the approach to integrate RCA with the gravity model.…”

“…In addition, the existing literature exhibits few studies only that ponder to connect the RCA with the gravity model like Abdul Kamal et al. , 2021; Ariza Marin, 2020; Ciuriak and D.and Kinjo, 2006; Guglielmo et al.…”

Investigating the impact of ICT-trade nexus on competitiveness in Eastern and Western European countries

“…The dependent variable is the competitiveness index (COMP). The main explanatory variable is trade openness (TR) which captures a country's trading activity in the world market (Allou et al, 2020;Arvin et al, 2021;Kamal et al, 2021;Anser et al, 2021;Dhamani et al, 2022;Nchofoung and Asongu, 2022). The theoretical premise on the importance of ICT is given by JES 50,4 Steinmueller (2001), Fong (2009), James (2012) and Sein et al (2018).…”