Research
Welcome to my research page. My academic work primarily focuses on international trade policy, export competitiveness, and the structural challenges facing firms participating in global value chains.
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Peer-Reviewed Publications
Similarity of NTMs and Its Impact on Import Unit Values (2025)
Journal: The World Economy
Abstract: Non‐tariff measures (NTMs) may lead to a higher regulatory burden on firms that are required to comply with them. The increase in similarity of NTMs applied on their respective imports by the trading partners may reduce this burden as exporting firms are required to comply with them regardless of whether they sell in the domestic market or export to markets applying similar NTMs. I determine the influence of increasing similarity of NTMs applied by the United States and its trading partners on the unit value of imports. I split the sample of source countries based on their income level and find that the influence on unit value is different within the richer and the poorer countries. The robustness checks reinforce the findings that the increasing similarity of NTMs applied by the trading partners does influence the unit value of imports but does so differently based on the income level of source countries.
Do export subsidies dampen export unit values across markets? A case study on Pakistan (2025)
Journal: Economia e Politica Industriale: Journal of Industrial and Business Economics
Abstract: The export unit value is influenced by the characteristics of the export market destination. However, this influence is dampened when export subsidies are provided by the government on specific products to incentivize the exporters. We use firm-level data on Pakistani exporters merged with product-level data on the provision of export subsidies in this study. We find that the provision of export subsidies on the products exported dampens this relationship as some of the export market characteristics that otherwise influence export unit value become insignificant. We split the sample of firms according to the product classification of the products exported, such as differentiated industrial products and homogenous non-industrial products, and the size of total export sales to determine whether the provision of export subsidies dampens the impact of export market characteristics on export unit value across the different product classifications as well as across larger and smaller exporters. We believe that the results have implications for policymakers providing incentives to the exporters.
The Determinants of International Certification among Manufacturing Firms in Pakistan (2024)
Journal: Lahore Journal of Business
Co-author: Farrukh Iqbal
Abstract: This study investigates the factors that influence international certification among Pakistani manufacturing firms. About a third of such firms in Pakistan hold one or more certificates related to management or technical processes. The existing literature suggests that this demand is influenced by factors such as sector of activity, market competition, human capital and information environment, ownership type, and available resources. By analyzing a large, random sample of Pakistani manufacturing firms, we find strong correlations between these factors and international certification. We also discover that owner attitude, an aspect overlooked in previous studies, plays a role in the certification decision. While our statistical model does not fully explain the determinants of certification for small firms, we do find that certification is associated with increased profitability among small enterprises. This implies that small enterprise development agencies can improve the effectiveness of their programs by considering certification status as an additional criterion for allocating support funds. The results of our study have policy implications related to exporting, staff training, diffusion of firm ownership, and enhanced information access facilitated by modern technology tools.
Determinants of Management Practices among Manufacturing Firms in Pakistan (2024)
Journal: Pakistan Development Review
Co-author: Farrukh Iqbal
Abstract: A strong case for looking at management quality as a source of productivity has been assembled in recent years by studies showing that variations in management quality account for a big part of the productivity gap across firms and countries. In this paper, we investigate the determinants of management quality among Pakistani manufacturing firms, using a new World Bank Enterprise Survey that provides firm-level information on the use of modern management practices. Our findings suggest that the adoption of good management practices is influenced by such characteristics as firm size, product market competition, ownership type, and the information available to staff and managers. We also find that such considerations are more relevant for medium and large firms than for small firms. Finally, we find that the link between management practices and productivity is not uniform and varies from practice to practice.
Do Chinese Technical NTMs Increase the Exports of Less Sophisticated Products to China? (2022)
Journal: The Chinese Economy
Co-author: Zhaohui Niu
Abstract: Much evidence suggests that NTMs (non-tariff measures) have become a major instrument of trade policy. Compliance with NTMs entails significant costs on exporters who may be required to meet pre-determined standards set by the importing countries to prevent the import of substandard and dangerous products. We consider NTMs imposed by China on its imports as China not only dominates world trade but its trade policies influence global trading patterns. Our results suggest that NTMs do help increase imports of less sophisticated products into China, particularly if they are originating from low-income countries. Although, our OLS and IV estimations report similar results for products facing NTMs and not facing NTMs, the magnitude of the influence is higher for the products facing NTMs when we consider fixed effect estimations. We introduce an interaction variable defined by the income level of the trading partner. The interaction variable magnifies the influence of the level of export sophistication for products facing NTMs on imports into China, while that for products not facing NTMs become insignificant.
Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan (2021)
Journal: Pakistan Development Review
Co-author: Farrukh Iqbal
Abstract: Size-based industrial policy (support for small firms) has long been provided by the government in Pakistan while age-based policy (support for young firms) has become prominent in recent years. Both policies are typically justified by reference to positive effects on labour absorption. Despite their popularity among policymakers, however, the empirical basis for such policies has not been adequately analysed at the national level. We address this issue using data from a large, multisector, random sample of manufacturing firms and find empirical support for size-based policies but not for age-based ones. We also find that sizebased policies appear most relevant for firms with less than fifty workers.
The impact of long-term secured loans on exports at thefirm-level: The case of a developing country (2018)
Journal: Journal of International Trade and Economic Development
Abstract: We analyze the role of the accumulation of long-term secured loans on the participationof firms in exporting activities. Internal sources of finance, such as cash balance and itsequivalent as well as operating cash flow, may alleviate concerns on liquidity shocks andfinance shorter-term variable costs but long-term secured loans are likely to be requiredto finance fixed costs related to investments in plant, machinery and other fixed assetsthat complement exporting activities. Exporting activities may involve hysteresis suchthat the likelihood of a firm to participate in exporting activities is influenced by theaccumulation of long-term secured loans in the period prior to the export transactions.Even though the availability of internal sources of finance and the capital structure of afirm has greater economic significance, we observe that lagged long-term secured loansinfluences participation in exporting activities. Furthermore, we analyze the impact ofone-year lagged long-term secured loans on the participation of firms in exporting activ-ities based on the financial characteristics at the industry-level. This relationship holdsfor firms within industries with higher levels of long-term secured loans, higher levels offinance leverage, higher levels of asset tangibility and lower levels of total assets
The Impact of Manufacturing Activities in the Trading Partner on the Imports into Pakistan (2017)
Journal: IBA Business Review
Co-author: Farooq Pasha
Abstract: Econometric analysis performed for this paper suggests that Pakistan is likely to import more from trading partners that have a larger manufacturing sector relative to their GDP for the majority of product categories. The impact is stronger for processed products. This implies a higher risk of import dependency and associated competitive pressure from imports on manufacturing activities within Pakistan.
The Influence of Industry Financial Composition on the Exports from Pakistan (2014)
Journal: State Bank of Pakistan Research Bulletin
Abstract: I determine the influence of the industry financial composition on the export flow between Pakistan and its trading partners. The importing countries are split according to their OECD membership status and their level of banking credit. The degree of financial dependence and asset tangibility of an industry can determine the ability of firms to obtain external finance and fund international trading activities. On the other hand, the level of financial development and exogenous shocks to the banking credit of the importing country is likely to impact the influence of the industry-level financial composition on the exports from Pakistan.
Books and Book Chapters
Pakistan and EU Trade Potential: The Bottlenecks and Roadmap for Reforms. (2023)
Publisher: Friedrich Naumann Foundation for Freedom - Pakistan & PRIME Institute
Abstract: Trade plays a vital role in driving economic growth, but Pakistan’s trade performance has been volatile, with stagnant export growth and a rising trade deficit. The Generalized Scheme of Preferences (GSP) Plus is offered to a select group of exporters to the European Union (EU) based on a set of pre-defined criteria and the fulfillment of various conventions regarding human rights, labor rights, good governance, climate change and environment protection. Pakistan received the status on January 1, 2014. Pakistan currently is a signatory to all the 27 conventions and is also a signatory to the additional conventions proposed under a new revised scheme that is likely to replace the current one that is expiring at the end of this year. Although, Pakistan is not in imminent danger of losing the preferences awarded to its exporters, uncertainties loom as Pakistan faces challenges that can adversely impact its status. While Pakistan has experienced growth in trade with the EU during the GSP Plus period, it is imperative that the exporters continue to receive the preferences. To fully exploit trade potential and effectively compete with counterparts, it is essential to assess the trade patterns. This report undertakes a comprehensive exercise to not only determine the trading patterns with the EU but also bring forward recommendations that can help boost Pakistan’s exports to the EU and to the world.
Trade Connectivity (2022)
Publisher: Economic Advisory Group & PRIME Institute
Do Non-Tariff Measures Matter? Assessing the Impact of Technical Measures to Trade on the Exports of Pakistan (2018)
Book: Non-Tariff Measures: Economic Assessment and Policy Options for Development
Editors: Jamie de Melo & Alessandro Nicita
Publisher: United Nations Conference on Trade and Development (UNCTAD)
Summary Pakistan’s exports are concentrated in products that contribute a small percentage of total world trade (such as textile products, vegetable products and leather products). Therefore, the bilateral export composition of Pakistan may vary significantly from the overall import composition for each of its trading partners. We use this deviation, which we label ‘exporter-importer bias’ to identify the impact of NTMs (Sanitary and phytosanitary (SPS) measures and Technical Barriers to Trade (TBT)) on Pakistan’s exports. This ratio provides an indication to the relative importance of a product in the export bundle of the exporting country to the import bundle of the importing country. Our econometric strategy investigates the impact of SPS and TBT measures on exports from Pakistan by interacting the frequency index and the coverage ratio of SPS and TBT measures with the exporter-importer bias. We find that SPS measures are less trade-restricting when the exporter-importer bias is larger, while the same does not apply for TBT measures. Our results suggest that TBT measures are trade-enhancing regardless of the exporter-importer bias. However, when we consider the importing markets as either well-regulated or less-regulated based on their level of incidence of SPS and TBT measures, we find that TBT measures are trade-enhancing when imposed by well-regulated markets reporting lower levels of exporter-importer bias. In essence, our results indicate that compliance is mandatory in both well-regulated and less-regulated markets but the stringency of TBTs is likely to influence trade in the former rather than in the latter.
Research Projects
Trade Policy Measures to Encourage a Shift towards Green Technologies (2024)
Publisher: Consortium for Development Policy Research
Co-authors: Farrukh Iqbal, Zara Salman, Eva Arshad, Hasan Aziz. & Ijaz Nabi
Summary Over the last two decades or so, the context for economic development in Pakistan has been increasingly affected by environmental considerations. In brief, these considerations reflect the need for Pakistan to reduce its carbon footprint. Indeed, in the most recent round of international discussions, the Government has reiterated its commitment to the specific target of halving projected carbon emissions by 2030. While actions in many areas would be relevant, the Government has identified three priority areas: electric vehicles, coal imports, and renewable energy. This report assesses the extent to which trade and related policy actions can help Pakistan achieve greener growth. It focuses on the following specific policy areas: tariff and non-tariff measures on environmental goods; a framework for dealing with environmental services; and broader industrial policy measures.
COVID-19 and Disruption in Supply Chains: Case Study of Asia-Pacific Region (2021)
Publisher: The International Institute for Trade and Development
Summary The paper “COVID-19 and Disruption in Supply Chains: Case study of Asia-Pacific Region” studies the pandemic consequences on international trade in Asia Pacific region, which is known as “Factory of the World” due to its high participation in global value chains (GVCs). The study finds that the pandemic impact varies across country, sector and trade directions. The Asia-Pacific also apply several trade measures both import and export side in response to the pandemic crisis. The paper suggests policymakers to ensure better trade facilitation by taking into account different context of sectors and trade flows. In addition, policymakers should maximize the benefit of RTAs and FTAs by negotiating for better trade flows of products that frequently move cross border within the region in high volumes.
Regional integration and cooperation of Pakistan in health-related sectors (2021)
Publisher: United Nations ESCAP
Summary The spread of the COVID-19 pandemic has resulted in significant challenges for the Government of Pakistan. However, the pandemic has also provided opportunities for the Government to enhance trading linkages in medical products, particularly within the Asia-Pacific region. With the onset of the pandemic, the demand for diagnostic test kits, ventilators, protective outfits and equipment, and disinfectants and sterilization products increased not only in Pakistan but across the world. In addition, greater demand for the services of health-care workers increased the scope for migrant workers to serve their country of origin. Finally, the role of digital technologies to increase the quality of health service delivery has become evident.
The report offers a comprehensive review of issues that have affected the effectiveness of Pakistan’s policy responses to the COVID-19 pandemic. It includes an analysis of the trading patterns of health-related goods and professional services between Pakistan and its regional trading partners in Asia and the Pacific, as well as the role of tariffs and the non-tariff measures before the pandemic and of measures taken by the Government to meet the surging demand for medical products during the pandemic. It examines various government measures to alleviate the adverse impact of the pandemic, including the nationwide lockdown at the onset of the pandemic in Pakistan, and the handouts and economic relief programmes to affected citizens and businesses. The analysis concludes with a proposed action plan for policymakers.
Link | PDF | Presentation
Working Papers
Pakistan and the rest: A tale of dismal productivity growth, misallocation, and missing transformation (2024)
Co-authors: Ahmed Pirzada, Saihan Mohammad & sarah Javaid
Publisher: Discussion Paper 24/778, University of Bristol
Abstract: We leverage newly available datasets to study key factors which explain why Pakistan has seen limited transformation in recent decades. First, we show that one of the reasons for this is low productivity growth. Average labour productivity growth due to within sector improvements equals only 0.73% between 1990 - 2018. This is explained by decreasing capital-output ratio. In sharp contrast, factor inputs only explain 6.22% of variation in labour productivity in Pakistan. Second, while we show that the extent of misallocation across the economy has decreased over time, there is significant misallocation between the agriculture and the non-agriculture sectors. Finally, we explore the extent to which GVC linkages can facilitate the transformation process by decreasing misallocation and increasing productivity. Throughout the paper, we also highlight trends in other developing countries.
Micro, small, and medium enterprises amid crisis times: lessons from pandemic experience in Pakistan (2022)
Co-authors: Vaqar Ahmed & Maaz Javed
Publisher: International Development Research Centre and Sustainable Development Policy Institute
Concept Note: In fiscal year (FY)23, Pakistan’s economy is expected to remain in a low-growth zone with double digit inflation. Post-Covid pressures, commodity super cycle, rise in global input prices, and recent floods have meant that the commodity producing sectors are now faced with uncertain future and demand. Its impact on micro, small and medium enterprises (MSMEs), leads to implications for employment and welfare. SDPI in collaboration with IDRC has attempted to assess the impact of recent crises on the performance and recovery of MSMEs. Using
a firm-level survey we study challenges and risks amid testing times. Second objective is to study how effective has been the government’s response and what were the structural and administrative barriers that may have limited the effectiveness of stimulus package during Covid-19? Report offers lessons on how design of fiscal stimulus could be improved. Lastly, we note key risks to MSMEs during ongoing and next fiscal year. The data to analyze the impact of COVID-19 on MSMEs is taken from the survey conducted by Sustainable Development Policy Institute (SDPI) in 2021, titled “Damage Need Assessment of MSMEs Amid COVID-19”.
The impact of electricity constraints on access to finance: A firm-level study (2014)
Publisher: MPRA Paper 59507, University Library of Munich, Germany
Abstract: Firms that report insufficient electricity from the public grid are likely to experience higher constraints on access to finance. The lack of availability of electricity will translate to greater production delays and lower expected profits. Consequently, it will have an adverse impact on the constraints on access to finance. In this paper, I study the impact of constraints on getting electricity as well as electricity usage costs on the constraints on access to finance. I determine whether firms within countries with a deficit level of electricity supply exhibit different patterns in the aforementioned relationship than firms within countries with a surplus level of electricity supply.
Bank competition and export diversification (2013)
Publisher: MPRA Paper 50774, University Library of Munich, Germany
Abstract: The role of the banking industry in export promotion cannot be over-emphasized as banks provide the necessary financial support for borrowers in various industries to undertake investment activities. The banking industry consists of larger and smaller banks and the former are likely to be the preferred lenders as they provide loans for investment activities at a lower interest rate but may only finance the good borrowers within selected industries that are considered profitable. The banks require an appropriate market structure based on the level of competition in order to finance the maximum number of industries and in turn promote exporting activities across several industries within an economy. The influence of the market structure on export diversification is determined by the level of financial development and the prevailing macroeconomic conditions within an economy. With the help of an industry-level dataset on bilateral trade flows between various countries, I consider OLS and IV regressions to determine whether the Lerner Index of the banking industry, an indicator on the degree of competition, influences the number of industries exported. In order to consider the impact of competition in the banking industry on export diversification at different levels of financial development of the exporting countries, I split the countries into OECD member countries, non OECD countries and include a pooled set of countries. As macroeconomic conditions are likely to influence the market structure of the banking industry, I further split the samples of countries on the basis of the median levels of lending and the deposit rate spread, foreign bank participation rate and the ratio of government credit to private credit provided by the domestic banks for the respective groups of countries based on their OECD membership status and find varying results under different macroeconomic conditions and levels of financial development. In the recent years, several studies have determined the role of financial markets on exporting activities to be significant at the country-level as well as at the firm-level. To the best of my knowledge, this is one of the first paper to study the influence of competition within the banking industry on export diversification at the industry-level.
The impact of the exports of BRIC countries plus Turkey on the exports of Pakistan (2013)
Publisher: MPRA Paper 52477, University Library of Munich, Germany
Abstract: The BRIC countries (Brazil, the Russian Federation, India and China) plus Turkey contribute a significant proportion of the exports that originate from developing countries. The varieties imported from the BRIC countries plus Turkey in the textile, creative and leather industries are likely to take precedence over the imported varieties from smaller developing countries as either their production is relatively more efficient in labor-intensive industries or their resources are relatively more abundant. Therefore, the prominence of the exports of the BRIC countries plus Turkey can have implications for smaller developing countries that also specialize in the production of labor-intensive products, such as Pakistan. I study the impact of the exports of the BRIC countries plus Turkey on the exports of Pakistan to the set of importing countries based on their importance as major export destinations of Pakistan for each industry considered and the set of importing countries based on the geographical location of the importing countries as regional and non-regional destinations of the BRIC countries plus Turkey. In this paper, I aim to determine whether the exports from the BRIC countries plus Turkey either complement or substitute exports from Pakistan to the specific set of export destinations.
The effect of foreign competition on product switching activities: A firm level analysis (2012)
Publisher: MPRA Paper 52477, University Library of Munich, Germany
Abstract: Pressure from foreign competition on the decision to introduce new products or on production costs may influence firms to particpate in product switching activities. Firms switch products if they either add or drop products within their product range. I test whether pressure from foreign competition is likely to influence firms that concurrently add and drop (churn) products rather than firms that i) do not undertake any product switching activity, ii) add products only, or iii) drop products only. Firms pay substantial fixed costs to switch products and their productivity levels are likely to determine such ability. I consider whether firms that invest in research and development activities and export their final products are likely to churn products as they are able to generate greater productivity levels than firms that undertake either one of the two activities. As firms constrained by the lack of adequately educated workers may have workers who cannot adapt to different set of skills necessary for product switching activities, I consider whether such firms are likely to churn products as they are exposed to pressure from foreign competition in comparison to firms not constrained by the lack of adequately educated workers. In addition, the contract-intensive nature of an industry can also dictate whether firms exposed to foreign competition can churn products as they may be constrained due to their contract obligations with their buyers and suppliers. The results indicate that pressure from foreign competition is likely to influence the decision of firms to churn products rather than add products only or undertake neither product switching activities. There is little evidence that firms facing pressure from foreign competition will churn products rather than drop products only, except for the most productive firms that invest in research and development activities and export participation.
The influence of industry financial composition on export flow: A case study of a developing financial market (2012)
Publisher: MPRA Paper 43792, University Library of Munich, Germany
Abstract: Using a dataset on bilateral trade flow at the industry-level from 1980 to 2006, I determine the influence of the industry financial composition on the export flow between a developing country, Pakistan, and its trading partners. Firms undertaking exporting activities may need to fund their investments from external sources of finances such as bank loans. The degree of financial dependence and asset tangibility of an industry can determine their ability to obtain external finance. Hence, the financial composition is likely to influence the value of export flow. I split the group of importing countries according to their level of financial development and whether they face episodes of banking crisis in order to determine the influence of industry financial composition under different macroeconomic environments. In addition, although the South Asian economies have similar characteristics in terms of the level of financial and economic development, Pakistan has a greater presence of larger domestic banks and foreign banks that are likely to prefer lending to firms that exhibit better characteristics that promise higher returns. Pakistan also records on average a higher level of banking credit than its neighboring countries for the time period considered reflecting its financial depth. I consider whether financial dependence and asset tangibility influence the ratio of total export flow from Pakistan to total export flow from South Asian countries at the industry-level in order to determine the impact of industry financial composition on the regional significance of industry-level export flow from Pakistan.
The influence of financial leverage of firms on their international trading activities (2012)
Publisher: MPRA Paper 35765, University Library of Munich, Germany
Abstract: Using the BEEPS dataset from Enterprise Surveys, I study the effect of financial leverage (percentage of assets funded by bank loans) of firms on their decision to participate in various trading activities, such as exporting, importing and two way trading (firms that export and import). I determine that the intensity of financial leverage does not inhibit firms which export only from becoming two way traders, but it does inhibit firms which import only or operate only within the national market to become two way traders. The effect is determined to be stronger for firms that operate only within the national market than firms that import only. Since unobserved factors may influence both trading activities and financial leverage, I instrument for financial leverage using a variable that combines overdue payments to suppliers and the relationship of firms with their lenders. I contribute to the literature as I augment a model that determines the effect of financial leverage on various trading activities by implementing differences between industries due to their level of external dependence and asset tangibility. Hence, the effect of financial leverage is determined to vary between different trading activities within industries that exhibit different levels of external dependence and asset tangibility.