Pakistan-India bilateral trade in sports goods sector

Abstract

Using the gravity model to estimate the trade flows for the major trading partners of Pakistan and India in the sports goods sector, we find, as expected, that the distance between the two countries has a negative impact on exports, while the exporter and importer GDPs affect exports positively. For Pakistan and India, specifically, we find that trade between Pakistan and India is 288 % lower (according to the pooled OLS) and 249 % lower (according to random effects model) than trade between any two similar countries. The trade that is already taking place between the sports goods sectors of the two countries is in accordance with their revealed comparative advantage. However, there is a need for the two countries to export sports goods in which they have higher RCAs. We also found that both countries export the same product lines, so there is a need for further disaggregated analysis within product lines. When we calculated the trade concentration index, we found that Pakistan’s exports to India have become more diversified, but Indian exports to Pakistan are more concentrated in terms of product lines. We also found evidence for the presence of both inter- and intra-industry trade in the sports goods sector of Pakistan.