Effect of trade barriers on export performance during COVID-19 pandemic: a comparative study among South Asian textile industries

Abstract

The study focused on determining essential government policies and trade barriers affecting the textile industry's export performance during the COVID-19 pandemic. This study has analysed the effect of government export policies on the export performance of the textile industry. This study has also compared factors among three South Asian textile industries, including Pakistan, India, and Bangladesh. The study identified nine essential government export policies and trade barriers based on Industrial Organization View (I/O View). A panel regression model was used to analyse the significance of each government policy and trade barrier affecting textile export performance. Results of the study showed that currency exchange rates, the cost to export, time to export, political stability of the country, quality of infrastructure in the country, freedom from corruption, business cost of terrorism and economic stability in the country have a significant effect on export performance of the industry. In contrast, taxes on doing business have an insignificant effect on export performance. The Seemingly Unrelated Estimation (SUEST) test compared the differences in export performance of Pakistani, Indian and Bangladeshi textile industries due to government policies. The results showed that a higher level of time to export, cost to export and business cost of terrorism lead to the low export performance of the textile industry. At the same time, a higher level of currency exchange rates, political stability of the country, quality of infrastructure, freedom from corruption and economic stability in-country lead to the high export performance of the textile industry. Further, taxes on doing business have an insignificant effect on export performance. This study is among the few contributing to the textile industry during the COVID-19 pandemic. Due to uncertain circumstances, it becomes hard for the government to identify important factors which could help textile exporters to survive and grow during the COVID-19 pandemic. The study has identified important government policies and trade barriers affecting textile exports based on strong theoretical support and has also compared and elaborated on the importance of each factor across three South Asian countries. This study will help policymakers reconsider export- related factors to enhance their textile exports and revive their economy after the COVID-19 pandemic.