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Trade:
• External trade is the exchange of goods and services from one country to
another.
• It creates employment.
• It opens doors for product specializations. E.g. cotton products are Pakistan’s
specialty.
Import:
Export:
• When a country sells goods or services it is known as export.
• Visible trade is the exchange of goods while invisible trade is the exchange of
services.
Exports of Pakistan:
Trend of Export:
• Initially, Pakistan was exporting primary goods but now it is more focused on
exporting manufactured goods.
• Export helps Pakistan in earning foreign exchange and improving the Balance of
Trade.
Shortcomings:
Imports of Pakistan:
• It imports raw materials like iron ore, coke, manganese and crude oil.
Trend of Import:
• It imports most from Kuwait, Saudi Arabia, Japan, USA, UK and Germany.
Shortcoming:
GDP:
GNP:
• It represents the total value (monetary) of all goods and services produced by
the resources owned by the locals of a country in a period.
USA:
• Pakistan imports from the USA wheat, oil, vegetable, and machinery.
Germany:
UK:
Saudi Arabia:
Malaysia:
Sri Lanka:
USA:
Germany:
UK:
• Pakistan exports surgical equipment, raw cotton, rugs, and carpet to the UK.
• Pakistan exports ready-made garments, spices, and rice to UAE and Saudi
Arabia.
Japan:
Trade Routes
Land Route:
• The east land route of Pakistan involves India which is not feasible due to bad
relations.
• On the west are Bolan, Khyber and Khurram Pass. But it still lacks adequate road
links to connect Pakistan with CAS through Afghanistan.
• On the north is China, Karakoram Highway has strengthened trade between
both countries.
• On the south-west is Iran, there is RCD that connects Pakistan with Turkey
through Iran, but the road is not properly built and maintained.
Problems:
• The topography for trade is inadequate as there are steep slopes, mountains
etc.
Sea Routes:
• It also connects Pakistan to the middle east through the Arabian sea.
Air Route:
Problems:
• It is expensive.
Balance of Trade
Balance of Trade:
• It represents the value difference between exports and imports of goods and
services.
Balance of Payment = Value of export (goods + service) - Value of import (goods + services)
Pakistan’s Balance of Payment/Trade:
• Pakistan also imports crude oil and its price in the international market is
constantly increasing.
• The exchange rate of Pakistani rupee against USD and Pond is unfavorable.
• Foreign governments have placed restrictions on Pakistan trade e.g. child labour
issue and environmental issues.
• Bad infrastructure.
Steps to improve Balance of Trade:
Increase exports:
Restrict imports:
• Imports should be restricted by imposing high tax on them e.g. luxury items.
Trade Barriers:
• Quotas – that is the physical quantity of goods and restrictions on their import.
• An exchange rate represents the value of one currency with respect to the
other.