Abstract
Pakistan has the highest potential for agri-business development and global marketing. This study responded to standing views about the importance of infrastructure for agricultural trade in Pakistan. It raises the concern to investigate the basic trade facilitation for the transportation of agricultural commodities. This research focuses on transport infrastructure being basic distribution drives. A gravity model is used for panel analysis of twenty countries for the period 2005 to 2015, to find the push and pull factors that contribute to agriculture exports of Pakistan. Fixed effects or random effects technique is employed based on the Hausman’s test to investigate the effect of transport infrastructure (ports, air and road) on agricultural exports of Pakistan. Guided by results, it infers that improved ports facilitation can promote the agriculture sector of Pakistan as majority of trade activities are performed through ports because of their cost-effectiveness. Likewise, air network affects agricultural exports positively owing to the reduced time it takes for the air cargo to reach the destination country. Improved connectivity through roads is required to speed up the process across the regions effectively. Key words: Infrastructure, Pakistan, agriculture exports, gravity model, panel analysis.
Highlights
The access to international markets is limited in developing countries owing to the poor infrastructure
Minimum and maximum values with mean and standard deviation are given in raw form for all the variables used to see the impact of infrastructure on agricultural exports of Pakistan
In the correlation matrix for Equation 1 shown in Table 2, it can be seen that product of gross domestic product (GDP) per capita (GDPCT) is highly correlated with difference of GDP per capita (US$) between exporting and importing countries (ENDW) and exchange rate (ER)
Summary
The access to international markets is limited in developing countries owing to the poor infrastructure. The physical infrastructure and logistics such as roads, railways, air and sea cargo are considered essential to distribute goods worldwide. It boosts agricultural trade by reducing the transaction and distribution costs. Agricultural production in Pakistan is fairly decent despite the weaknesses in infrastructure (FAOSTAT, 2016). It does not hold strong position in world’s agricultural trade. This study responded to standing views to explore the impact of infrastructure on agricultural exports of Pakistan which has highest potential for agri-business development and global marketing.
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