UNRAVELING EXPORT SOPHISTICATION DRIVERS: AN EMPIRICAL ANALYSIS OF PAKISTAN'S TRADE LANDSCAPE

Abstract

This study highlights the determinants of export sophistication in Pakistan. Time series data has been taken for the years 1996 to 2022. The World Bank's World Integrated Trade Solution (WITS) is the source of data for the Index of Export Sophistication (EXPY). The variables that impact export sophistication are investigated in this research. In the context of Pakistan, there is a dearth of research on estimations and determinants. The purpose of the Augmented Dickey Fuller (ADF) test is to identify the core issue with the unit root.  To observe long-term relationships in the underlying variables, this study uses the Auto Regressive Distributive Lag technique. Regression results indicated that term of trade, official exchange rate and foreign direct investment negatively affect the export sophistication in case of Pakistan. While political stability, GDP per capita, globalization and world GDP per capita are positively related with export sophistication in case of Pakistan.

Keywords: Export Sophistication, Official Exchange Rate, Social Globalization, Foreign Direct Investment, World GDP Per Capita, Term of Trade, Political Stability