Impact of Commodity Concentration and Geographical Concentration upon Export instability in Pakistan

Abstract

Abstract This research study investigates the factors affecting export instability in Pakistan by using time-series data from 1981 to 2017. The determining factors of export instability in this study are commodity concentration index, geographical concentration index, food ratio, export earnings and total export quantity. The study employs Autoregressive Distributed Lag (ARDL) model to investigate the long-run (LR) relationship between export instability and its employed determinants. The empirical evidence reveals that commodity concentration, geographical concentration, food exports and export earnings are the key factors explaining export instability in Pakistan. The study finds the positive relationship between export instability and commodity concentration, while a negative association with geographical concentration. Furthermore, food exports and export earnings are also found to be negatively related to export instability. The study finds that concentration or dependence on a few exports causes export instability in Pakistan, but this problem would be overcome if Pakistan’s commodity basket for exports become diversified.