Impact of Exports on Economic Aggregates of Pakistan

Abstract

The study employs CGE model, on the data provided in SAM 2001-02 for Pakistan designed by Dorosh et al. (2006), to investigate the impact of Pakistan’s exports on the major aggregates of the economy. To this end, three experiments have been conducted, exportsare increased by 5% in the first simulation (SIM-I), in the second simulation (SIM-II) by 10% and in the third simulation (SIM-III) by 15%. The findings of the study reveal that increase in exports has favourable impact on the performance of macroeconomic variables of the economy i.e. GDP, public and private consumption, savings and investment. Domestic output level of most of the commodities has risen except mine, food manufacturing and other manufacturing. Incomes and expenditures of all the households have risen that results in rise of utility level of all the households. Moreover, all the households have also recorded an increase in the values of compensating variation which implies higher level of welfare for households. However, the value of compensating variation for non-agriculture households has risen more than that of agriculture households indicating pro-urban effect.  Equality among the households has improved as the inequality indices have registered declining trend. The study suggests that export promotion measures should be incorporated in poverty alleviation, income equality and economic growth strategies.