Pakistan-India Trade:
Pakistan-India Trade: Pakistan-India Trade:
What Can India and Pakistan Do To Maximize the Benefits from Trade? South Asia, as firms move in response to wage differences. Additionally, the recent headwinds from the Euro crisis have caused a deceleration in exports and a reversal of portfolio capital, and lowered gross domestic product (GDP) growth in developing countries. Some of these downside risks to growth can be minimized through increased South-South trade, such as that in South Asia. CurrenT sTaTe of BilaTeral Trade BeTWeen india and PaKisTan India and Pakistan have one of the world’s most restrictive trade regimes. Barriers to trade are complex, and particularly “thick” at the land border. These barriers can be divided into three different categories: • Tariff barriers. • Non-tariff barriers—a bigger constraint to trade than tariff barriers. • Trade logistics and connectivity—the biggest constraints to trade in South Asia. All of these add to high transaction costs and longer times for trading. High costs of trading have restricted the growth benefits of scale economies, specialization, and agglomeration economies. These costs have diverted employment and trade from formal to informal sectors. Estimates on informal trade between India and Pakistan vary from half a billion to about a billion dollars (all dollar figures in this essay refer to U.S. dollars). A large proportion of informal trade occurs via Dubai, a process which is inefficient and costly. Informal sectors account for the majority of nonagricultural jobs in the region (Ghani and Kanbur 2012). So what do India and Pakistan trade? Indian exports to Pakistan are largely limited to about 15 commodities (De, Raihan, and Ghani 2012). These goods accounted for around 64 percent of the total Indian exports to Pakistan in 2000, rising to around 80 percent by 2010. These commodities include sugar, raw cotton, synthetic fabrics, tea, and petroleum products and chemicals, reflecting India’s diversified industrial | 99 |
Kalpana Kochhar and Ejaz Ghani base. Shares of both raw cotton and woven fabrics in India’s exports to Pakistan increased from almost negligible amounts in the year 2000 to more than 13 percent in 2010, whereas the share of oil-cake and other solid residues contracted from about 16 percent to 3 percent during the same period. The composition of official exports from Pakistan to India has been limited to just a few commodities: fruits and vegetables, wool and related products, petroleum products, chemicals, lead, and, more recently, cement. The sectors with large shares of exports from Pakistan to India in 2010 were fruits (19 percent), followed by cement (11 percent), and petroleum products (7 percent). What about informal trade? The main Indian products that reach Pakistan informally include tires, auto components, pharmaceuticals, engineering products, chemicals, and some textiles. These sectors in India are therefore expected to benefit from a better trade environment. Pakistani consumers will benefit from reduced prices for these products. Meanwhile, Pakistan’s unofficial or informal exports to India include cement, fruit and vegetables, cotton, some specialized textiles, and sports items—currently arriving via Dubai. These are all expected to experience a rapid boost with more formal India-Pakistan trade. The CosT of TradinG Trade and good infrastructure are fundamental building blocks of economic development. Trade logistics encompass an array of essential activities for trade—transit trade, warehousing, cargo consolidation, border clearance, distribution, and payment systems. Poor logistics deter engagement in regional production-sharing. Countries with better logistics can grow faster, become more competitive, and increase their investment. Better logistics can have a greater effect on trade promotion than can tariff cuts; boosting logistics performance in low-income countries to the middle-income average could enlarge trade by around 15 percent, according to some estimates. This would benefit firms and people, because they would receive lower prices. It would also support diversification into higher value-added exports, new goods, and modern services. Reducing the cost of trading can substantially increase | 100 |
- Page 58 and 59: Pakistan’s Trade with India: Thin
- Page 60 and 61: Pakistan’s Trade with India: Thin
- Page 62 and 63: Perspectives from India | 53 | ARVI
- Page 64 and 65: Perspectives from India growth econ
- Page 66 and 67: Perspectives from India Pakistan. T
- Page 68 and 69: Managing India-Pakistan Trade Relat
- Page 70 and 71: Managing India-Pakistan Trade Relat
- Page 72 and 73: Managing India-Pakistan Trade Relat
- Page 74 and 75: Managing India-Pakistan Trade Relat
- Page 76 and 77: Managing India-Pakistan Trade Relat
- Page 78 and 79: Managing India-Pakistan Trade Relat
- Page 80 and 81: Managing India-Pakistan Trade Relat
- Page 82 and 83: Managing India-Pakistan Trade Relat
- Page 84 and 85: Additional Trade Challenges: Transp
- Page 86 and 87: Additional Trade Challenges: Transp
- Page 88 and 89: Additional Trade Challenges: Transp
- Page 90 and 91: Product Code Additional Trade Chall
- Page 92 and 93: Additional Trade Challenges: Transp
- Page 94 and 95: Additional Trade Challenges: Transp
- Page 96 and 97: Additional Trade Challenges: Transp
- Page 98 and 99: Additional Trade Challenges: Transp
- Page 100 and 101: Additional Trade Challenges: Transp
- Page 102 and 103: Additional Trade Challenges: Transp
- Page 104 and 105: Additional Trade Challenges: Transp
- Page 106 and 107: What Can India and Pakistan Do To M
- Page 110 and 111: What Can India and Pakistan Do To M
- Page 112 and 113: What Can India and Pakistan Do To M
- Page 114 and 115: What Can India and Pakistan Do To M
- Page 116 and 117: What Can India and Pakistan Do To M
- Page 118 and 119: What Can India and Pakistan Do To M
- Page 120 and 121: What Can India and Pakistan Do To M
- Page 122 and 123: What Can India and Pakistan Do To M
- Page 124 and 125: What Can India and Pakistan Do To M
- Page 126 and 127: Non-Trade-Related Stakes of the Pak
- Page 128 and 129: Non-Trade-Related Stakes of the Pak
- Page 130 and 131: Non-Trade-Related Stakes of the Pak
- Page 132 and 133: Non-Trade-Related Stakes of the Pak
- Page 134 and 135: Non-Trade-Related Stakes of the Pak
- Page 136 and 137: Non-Trade-Related Stakes of the Pak
- Page 138 and 139: Recent Asia Program Publications Pa
- Page 140 and 141: Recent Asia Program Publications Ch
- Page 142 and 143: Recent Asia Program Publications Th
- Page 144 and 145: Woodrow Wilson Center Pakistan Scho
Kalpana Kochhar and Ejaz Ghani<br />
base. Shares of both raw cotton and woven fabrics in <strong>India</strong>’s exports to<br />
<strong>Pakistan</strong> increased from almost negligible amounts in the year 2000 to<br />
more than 13 percent in 2010, whereas the share of oil-cake and other<br />
solid residues contracted from about 16 percent to 3 percent during the<br />
same period.<br />
The composition of official exports from <strong>Pakistan</strong> to <strong>India</strong> has been<br />
limited to just a few commodities: fruits and vegetables, wool and related<br />
products, petroleum products, chemicals, lead, and, more recently, cement.<br />
The sectors with large shares of exports from <strong>Pakistan</strong> to <strong>India</strong><br />
in 2010 were fruits (19 percent), followed by cement (11 percent), and<br />
petroleum products (7 percent).<br />
What about informal trade? The main <strong>India</strong>n products that reach<br />
<strong>Pakistan</strong> informally include tires, auto components, pharmaceuticals,<br />
engineering products, chemicals, and some textiles. These sectors in<br />
<strong>India</strong> are therefore expected to benefit from a better trade environment.<br />
<strong>Pakistan</strong>i consumers will benefit from reduced prices for these products.<br />
Meanwhile, <strong>Pakistan</strong>’s unofficial or informal exports to <strong>India</strong> include cement,<br />
fruit and vegetables, cotton, some specialized textiles, and sports<br />
items—currently arriving via Dubai. These are all expected to experience<br />
a rapid boost with more formal <strong>India</strong>-<strong>Pakistan</strong> trade.<br />
The CosT of TradinG<br />
<strong>Trade</strong> and good infrastructure are fundamental building blocks of economic<br />
development. <strong>Trade</strong> logistics encompass an array of essential activities<br />
for trade—transit trade, warehousing, cargo consolidation, border<br />
clearance, distribution, and payment systems. Poor logistics deter<br />
engagement in regional production-sharing. Countries with better logistics<br />
can grow faster, become more competitive, and increase their<br />
investment. Better logistics can have a greater effect on trade promotion<br />
than can tariff cuts; boosting logistics performance in low-income<br />
countries to the middle-income average could enlarge trade by around<br />
15 percent, according to some estimates. This would benefit firms and<br />
people, because they would receive lower prices. It would also support<br />
diversification into higher value-added exports, new goods, and modern<br />
services. Reducing the cost of trading can substantially increase<br />
| 100 |
Change language