The Impact of Trade Facilitation on Pakistan’s International Trade

Abstract

The primary purpose of this study is to facilitate Pakistan in trade facilitation to improve trade efficiency and to promote the better development of foreign trade of Pakistan based on a comparative analysis with other nations. To better promote Pakistan’s foreign trade and to understand the impact of trade facilitation and trade costs on Pakistan’s foreign trade, this study uses the gravity model to analyze trade facilitation on Pakistan’s foreign trade. It discusses the intermediary effect of trade cost. After the study, the main conclusions are as follows: (1) Pakistan’s Trade Facilitation Index is low compared to the global scope. This requires Pakistan to improve its trade situation further and to increase its trade facilitation index. (2) There are some prominent problems in Pakistan’s import and export trade, especially export commodities. In addition, Pakistan’s import and export trade is unbalanced, and the trade deficit is large, which is not conducive to the sustainable development of trade. (3) Through the gravity model analysis, Pakistan’s Trade Facilitation Index significantly impacts import trade and export trade. However, in terms of major import and export commodity categories, the impact of the Trade Facilitation Index on the import and export of related products is not significant. It is found that the trade cost has a negative effect on Pakistan’s import and export trade and will also affect the promotion effect of trade facilitation on import and export trade. Finally, based on the above research results, this paper puts forward corresponding suggestions from the aspects of improving trade facilitation and reducing trade costs, such as strengthening the construction of power infrastructure, improving port construction, and taking measures to reduce the apparent and invisible costs in trade.