An Analysis of Pakistan’s Trade Potential in Afghanistan with Special Reference to ECO Bloc
Keywords:
Pakistan Afghanistan trade, Economic cooperrationAbstract
The bilateral trade between Pakistan and Afghan has a long history. Both
the countries are not only sharing common borders with each other, they
are member of Economic Cooperation Organization (ECO) and have a
remarkable potential for mutual trade. The gravity model used for the
estimation has testified the potential trade between the two countries. The
results from the gravity model suggest that Afghanistan has great potential
for Pakistan’s exports. However, the hypothesis that bilateral trade is low
and both countries trade less with each other than what is predicted by the
model was not supported by the estimation. As Pakistan share common
geographical border with Afghanistan, and both are also member of ECO
(Economic Cooperation Organization) the privilege of geography and the
existence of trade preferences between the two countries have resulted in
almost full utilization of the potential trade projected by the model for the
two countries. Despite diplomatic breakdowns for long period between
Pakistan and Afghanistan the trade between the through official channels
continued without much interruption
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