Global warming and export competitiveness of agriculture sector: evidence from heterogeneous econometric analysis of Pakistan.

Abstract

The increase in average annual temperature due to greenhouse gases emission is posing threat to the agriculture sector across the globe. Pakistan is labor abundant agrarian country that heavily depends on the agriculture sector for food, employment, and raw material for industries. This study is a preliminary investigation that explores the effect of increasing average annual temperature on the competitiveness of 24 major agricultural exports from 2003 to 2020. The revealed export advantage (RXA) is used to explore the competitive performance of selected agricultural exports, which is then normalized to examine the effect of increasing average annual temperature along with official exchange rate, urbanization, and globalization. The panel fixed-effect model with heteroscedasticity consistent robust standard error recommended by White (Econometrica 48(4):817-838, 1980)is used to explore model estimates, whereas the robustness check has been performed by using heteroscedasticity and multicollinearity consistent robust standard error model of Driscoll and Kaary (Rev Econ Stat 80(4):549-559, 1998). The estimated result reveals that the increasing average annual temperature has a negative but insignificant impact on the export competitiveness of selected agricultural exports. While, urbanization and exchange rate deprecation show a significant negative effect of higher intensity, respectively. Globalization, however, reveals a significant positive impact on the competitiveness of selected agricultural exports. This study, therefore, urges for the development of the agriculture sector by adopting SDGs proposed by the United Nations for sustainable economic growth and development.