ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)
Batool Bushra and Hiroyuki Taguchi
Correspondence: Hiroyuki Taguchi, htaguchi@mail.saitama-u.ac.jp
Graduate School of Humanities and Social Sciences, Saitama University, Japan.
pdf (332.61 Kb) | doi: https://doi.org/10.47260/bae/1314
This study used a structural gravity trade model and the Trade in Value-Added database of the Organization for Economic Cooperation and Development to examine how free trade agreements (FTAs) impact global value chain (GVC) participation in Pakistan. This study contributes to the literature by enriching evidence regarding the relationship between FTAs and GVCs, an issue rarely addressed in prior research. The study found that South Asian FTA terms related to the relationship between Pakistan and India, and Pakistan’s FTAs with China and Malaysia facilitated backward GVC participation in Pakistan by increasing foreign value-added inputs from India, China, and Malaysia into Pakistan’s exports. The implication for policymakers is that potential exists for exploring GVC activities because some GVC linkages, such as those between Pakistan and Bangladesh, remain underdeveloped.
South Asian Free Trade Agreement, Global value chains, Backward GVC participation, Structural gravity trade model, Trade in Value-Added database.
World Bank (2020) World Development Report—Trading for Development in the Age of Global Value Chains. The World Bank.
Baldwin, J.R. and Yan, B (2014) Global Value Chain Participation and the Productivity of Canadian Manufacturing Firms. In: Tapp, S., Assche, A.V. & Wolfe, R. Eds., Redesigning Canadian Trade Policies for New Global Realities. The Institute for Research on Public Policy, Montreal, Canada, pp.
Taguchi, H. and Tsukada, Y. (2022) Premature Deindustrialization Risk in Asian Latecomer Developing Economies. Asian Economic Papers, 21, 61–77.
Hummels, D., Ishii, J. and Yi, K.M. (2001) The Nature and Growth of Vertical Specialization in World Trade. Journal of International Economics, 54, 75–96.
Koopman, R., Powers, W., Wang, Z. and Wei, S.J. (2010) Give Credit Where Credit is Due: Tracing Value Added in Global Production Chains. NBER Working Paper, No. 16426. SSRN Electronic Journal.
Koopman, R., Wang, Z. and Wei, S.J. (2014) Tracing Value-Added and Double Counting in Gross Exports. American Economic Review, 104, 459–494.
Jones, R.W. and Kierzkowski, H. (2005) International Trade and Agglomeration: An Alternative Framework. Journal of Economics, 10, 1–16.
Kimura, F., Takahashi, Y. and Hayakawa, K. (2007) Fragmentation and Parts and Components Trade: Comparison between East Asia and Europe. North American Journal of Economics and Finance, 18, 23–40.
Piermartini, R. and Yotov, V. (2016) Estimating Trade Policy Effects with Structural gravity. WTO Staff Working Papers. SSRN Electronic Journal: ERSD–2016–2010.
Islam, A., Bloch, H. and Salim, R. (2014) How Effective is the Free Trade Agreement in South Asia? An Empirical Investigation. International Review of Applied Economics 28, 611–627.
Suhail, P. and Sreejesh, S. (2011) The Bilateral Trade Agreements and Export Performance of South Asian Nations with Special Reference to India Sri Lanka Free Trade Agreement. Romanian Economic Journal, 14, 115–130.
Taguchi, H. and Rubasinghe. D.C.I. (2019) Trade Impacts of South Asian Free Trade Agreements in Sri Lanka. South Asia Economic Journal, 20, 1–18.
Shaikh, F.M., Ram, N., Syed, A.A.S.G. and Shah, A.S. (2015) Impact of Trade Liberalization and South Asian Free Trade Agreement (SAFTA) on Textile and Rice Export on Pakistan’s Economy. Romanian Statistical Review, 63, 74–83.
Mahmood, F. and Jongwanich, J. (2018) Export-Enhancing Effects of Free Trade Agreements in South Asia. Journal of South Asian Development, 13, 24–53.
Wijesinghe, A. and Yogarajah, C. (2022) Trade Policy Impact on Global Value Chain Participation of the South Asian Countries. Journal of Asian Economic Integration, 4, 24–48.
World Bank (2016) Making Global Value Chains Work for Development. The World Bank.
Rose, A.K. (2000). One Money, One Market: Estimating the Effect of Common Resources on Trade. Economic Policy, 15, 9–45.
Vandenbussche, H. and Zanardi, M. (2010) The Chilling Trade Effects of Antidumping Proliferation. European Economic Review, 54, 760–777.
Okabe, M. (2015) Impact of Free Trade Agreements on Trade in East Asia. ERIA Discussion Paper Series, 2015–01.
Rahman, M.M. and Strutt, A. (2023) Trade-Restricting Impacts of Non-Tariff Measures in Bangladesh. Journal of the Asia Pacific Economy, 28, 1117–1139.