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Pak-India Trade Liberalization: How will Pakistan’s Manufacturing Sector fare? A Comparative Advantage Analysis

Naheed Memon, Manzil Pakistan

Pakistan and India have not yet normalized trade relations despite sharing a common border for more than six decades. Although significant developments have been made since the beginning of 2011, benefits of bilateral trade have not been fully obtained. Pakistan is yet to reciprocate the MFN status, granted by India upon formation of WTO. This study investigates the prudence of coaxing these countries to liberalize trade by studying the global competitiveness of Pakistan’s industrial sector so as to derive direction for policy makers. A Revealed Comparative Advantage Index for manufacturing products at HS 2 digit level code is constructed for Pakistan, India and China for the years 2003 to 2012. The study identifies the changing pattern in comparative advantage of Pakistan’s manufacturing industries. The study concludes that 18 industries should be protected upon liberalizing trade with India. These industries are termed as ‘vulnerable’, as they have moved from either borderline competitiveness to becoming uncompetitive or vice versa. The study also suggests that excessive concessions granted to China in the FTA and resistance to opening up trade with India may have resulted in inefficient trade i.e. imports from a less competitive partner and exports to a less lucrative market. The study establishes direction for further research to establish an ex ante impact of trade with India on the economy via change in production levels of these vulnerable industries given the impact of free trade with China and the availability of Chinese substitutes.

About the presenter:

Naheed Memon is the CEO of Manzil Pakistan, a public policy think tank based in Karachi. She is also a faculty in the Department of Economics and Finance and the Department of Mangenent at IBA. Naheed is also a Director of a number of her family owned companies which are all susbsidiaries of the Kings Group of companies in Karachi..She leads and advises the management ofKingsapparel Industries, Kings Clothing, Ace Travels and Medco amongs a few others.

Before moving to Pakistan six years ago,she worked for Merrill Lynch on the asset management side and serviced institutional clients. In England, Naheed also she set up a management consultancy firmwhich serviced clients such as PwC, Foreign High Commissions, Oil and Gas companies etc. Naheed holds a MSc. in Economics from Birkbeck College, London and an MBA from Imperial College, London.

Related: Ninth Annual Conference on the Management of the Pakistan Economy on the March 20-21, 2013, Eighth Annual Conference on Management of the Pakistan Economy, Seventh Annual Conference on the Management of the Pakistan Economy, Sixth Annual Conference on Management of the Pakistan Economy, Fifth Annual Conference on Management of the Pakistan Economy GROWTH, TRADE AND DEVELOPMENT, Fourth Annual Conference on Management of Pakistan Economy: Ensuring Stable And Inclusive Growth, Third Annual Confrere on Management of Pakistan Economy (Economic Reforms: The Road Ahead), Second Annual Conference on Management of the Pakistan Economy, First Annual Conference on Management of The Pakistan Economy -- April 28, 2005

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posted by S A J Shirazi @ 3/27/2014 04:00:00 PM,

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