Competitiveness of Pakistani rice in international market and export potential with global world: A panel gravity approach

Abstract

Rice is an important source for foreign exchange earnings for Pakistan’s economy, keeping this fact in mind, this study is to calculate competitiveness of rice export of Pakistan in international market compared to largest exporter countries and this article is the first empirical attempt using a panel-gravity approach by employing PPML technique and to find out potential countries for Pakistani rice export to 144 countries over the period 2003–2016. The outcomes of this study revealed that as compared to other major exporters of rice in the international market, Pakistan had high competitive and comparative advantage in the exportation and production of rice. We confirm the positive relationship between rice export of Pakistan and the main components of the gravity model, GDP of Pakistan and trading partner, the difference in income, common border, and WTO membership and an inverse relationship with distance, exchange rates and trade agreement. The results for rice export potential suggest Pakistan still has plenty of rice export potential with 109 countries and as such Pakistan can possibly reduce and gain foreign exchange earnings to reduce the trade deficit by targeting these countries. So as to utilize the potential benefits of rice exports, policy makers need to reinforce the competitiveness in rice sector of Pakistan.