Regional Trade Between India and Pakistan: Prospect of Most Favourite Nation (MFN)

Abstract

The globalization especially economic globalization let the process more progressive and with the advancements in the iteration of innovation and inventions in technologies related to trade, marine, communication, logistics, production and management etc, have substantially reshaped the pace of trade and exchange. In this paper the impact of political decision on regional trade between India and Pakistan has been studied, from the prospect of Most Favorite Nation (MFN). Where the time period was 1951 to 2011, using STATA. Study is based on Pre and Post MFN status. As the study shows that there is a substantial evidence that Indian decision of declaring Pakistan as MFN has shifted the dimension of trade in favor of India. Where the process of globalization and increasing consumerism in Pakistan has let the Trend to be significant in case of Indian exports to Pakistan. Whereas, Pakistan hasn’t gain much after this decision relatively. Moreover, Indian exports to Pakistan increase when Pakistan economy shows improvement. On the other hand, Pakistan export to India are indifferent of Indian economic situation. Status of government in Pakistan has insignificant impact on mutual trade.