Assessing the Impact of Physical Infrastructure, Border Efficiency, and Institutional Quality on the Export Performance of Pakistan: Gravity Model Analysis on Commodity Data

Abstract

In this study, our primary objective is to examine the impact of physical quality infrastructure, border efficiency, and institutional quality on the commodity export flow from Pakistan to its top trading partners, utilizing the gravity trade model. For analysis, the study employs several econometric approaches, including the Poisson Pseudo-Maximum Likelihood (PPML), which is our primary estimator. Among the variables in basic gravity models, the GDP of partner countries proved to be a significant determinant, having a favorable impact on the export flows of most commodities. The analysis revealed a negative relationship between export flows and geographical distance across most industries. The findings suggest that rupee depreciation does not support increasing export flows for most of the selected industries. Furthermore, the exports of most industries significantly increase due to improved infrastructure quality and enhanced border efficiency in importing countries. In partner countries, the estimates associated with institutional quality provided mixed results, with most industries yielding positive or insignificant outcomes. Conversely, the physical quality of infrastructure, border efficiency, and institutional quality in Pakistan appeared insignificant in most industries. 

JEL: F14