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Analysis of Pakistan–China FTA by propensity score matching with difference in differences

Author

Listed:
  • Arsalan Ahmed

    (Dawood University of Engineering and Technology Karachi
    Shandong University)

  • Qi Jian Hong

    (Shandong University)

  • Hassan Tahir

    (Ocean University of China, Faculty of Science)

Abstract

This study explores the effect of the Pakistan–China Free trade agreement on the export value and dual margins of trade for Pakistan and China. This study attempts to fill the gap in the literature related to the Pakistan–China Free trade agreement. It will determine the average treatment effect of T of Pakistan–China FTA on the export value and dual margin of trade for Pakistan and China under Pakistan–China FTA through Propensity Score Matching with Difference-in-Differences (PSM-DID). Also, the study focuses on both the aggregate level and three significant commodities. According to the results, After Pakistan–China FTA, the export value and intensive margin of Pakistan to the Chinese market increased in both the FTA inclusive and FTA exclusive commodities. However, this increment is much higher for the commodities that are not included in Pakistan–China FTA compared to the commodities included in Pakistan–China FTA. Nevertheless, the increment in the extensive margin is higher for the commodities included in Pakistan–China FTA compared to the commodities that are not included in the Pakistan–China FTA. Also, the Pakistan–China FTA's effect on the export value of Pakistan to China is found to be higher in fishery products compared to salt, stone, cement, and cotton. Correspondingly, the growth in the intensive and extensive margin of Pakistan's exports to China due to Pakistan–China is higher in the fishery products as compare to the salt, stone, cement, and cotton.

Suggested Citation

  • Arsalan Ahmed & Qi Jian Hong & Hassan Tahir, 2021. "Analysis of Pakistan–China FTA by propensity score matching with difference in differences," SN Business & Economics, Springer, vol. 1(7), pages 1-29, July.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:7:d:10.1007_s43546-021-00086-1
    DOI: 10.1007/s43546-021-00086-1
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    More about this item

    Keywords

    Pakistan–China FTA; Extensive margin; Intensive margin; Propensity score matching; Difference in differences;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • B17 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - International Trade and Finance
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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