Research

Research Determinants of Pakistan’s Export Performance

DETERMINANTS OF
PAKISTAN’S EXPORT
PERFORMANCE
Sajid Gul1 & Shafiq Ur Rehman2

Abstract:

The purpose of this article is to investigate different factors

affecting the demand and supply of Pakistani exports. Factors
affecting the demand of exports include real effective exchange rate,
nominal exchange rate, world production capability, world export
price variable, whereas factors influencing supply of exports include,
net national investment, gross capital formation, local production,
FDI and Pakistan export price. The period of the study is from 1990 to
2010. The sources of data are State Bank of Pakistan, Karachi Stock
Exchange, Handbook of statistics on Pakistan Economy and
International Financial Statistics. Two Stage Least Square Method
was applied in the study. Results show that, export demand decreases
with increase in Real Effective Exchange Rate. Insignificant
relationship was found between the demand of Pakistani exports and
export price variable and nominal exchange rate. This study also
found positive and significant association between the demand of
Pakistani export and World Income. On the other side, positive link is
found between local demand measured by GDP and supply of export.
Insignificant relationship was found between Foreign Direct
Investment and export supply but with negative coefficient. The
variables gross capital formation and net national investment has
significant positive association with supply of Pakistani exports.

Keywords: Export Growth, FDI, GDP, Two Stage Least Square

JEL Classifications: F13, F14, F15, F23, O1, L22

1
Faculty of Business Administration, Air University Islamabad, Pakistan.

2
Department of Management Studies, University of Malakand KPK
Pa kista n.

204 PAKISTAN BUSINESS REVIEW JANUARY2014