Pakistan’s Trade Flows with Shanghai Cooperation Organization: A Gravity Approach

Abstract

Pakistan has a growing economy and always seeks to integrate with different regional or free trade agreements. The main objective of this study is to estimate empirical evidence of Pakistan’s Trade flow with SCO. The study applied an augmented gravity model with panel data from 1993 through 2020 into two segmentations; pre-inclusion 1993-2016 & post-inclusion 2017-2020 of Pakistan with SCO. The key contribution of this study is to use an indicator of “corruption” to measure a country's internal governance condition. The estimated results reveal that Pakistan had the highest trade potential with Kazakhstan, Tajikistan, India, Russia & China. The policy implication of current research is Pakistan needs to enhance the effectiveness of its exports to increase market share in dynamic regions and improvements of the smooth transportation system are of utmost need for a successful trade.