Trade

By: Daood Aqeel

Benifits of Trade:
● Establishes a link in different activity
● Improves relations between countries
● Helps regions to obtain necessary goods from other regions
● Provides employment as a part of the tertiary requirement
● Inflow of Foreign Exchange
● Specialization of goods and services
● Domestic Resources are utilized to produce goods to meet the demands
● Flow of Capital and information technology
● Developing countries start to produce value-added products
● Through foreign trade a country increases national income
Exports of Pakistan:

● U.K: Raw cotton

● Eastern Europe: Cotton,cloth
● USA: Carpets, Rugs, Surgical equipment, sports goods
● China: Cotton Yarn
● Japan: Fish and Fish products
Imports of Pakistan:

● U.K: Machinery, Electrical Appliances

● Eastern Europe: same
● USA: Machinery, vegetable oil, wheat
● Middle East: Mineral oil
● Malaysia: Edible oil
● Japan: Machinery, Electrical Appliances
● Sri Lanka: Tea
● China: Electrical Appliances, Machinery
Effects of Importing High-Value goods:
● The Imbalance of trade has to be filled by taking loans or foreign economic
assistance which increases debt
● Developmental projects have to be curtailed
● Reliance on foreign assistance increases
● In case of non-payment of loans, an economic or trade embargo may be
imposed
● In order to repay the loans, the assets of a country may have to be sold
● Business and commercial activity slows down.
GDP and GNP
● GDP: gross domestic product means the total value of all the goods and
services produced within a country and defines a nation’s economy in
geographical terms
● GNP: gross national product means the total monetary value of all the goods
and services produced by the resources owned by the citizens of the country (
can take place anywhere in the world )
●
Reasons for Negative Balance of Payment:
● Our goods cannot compete in a highly competitive world market as they lack
standardization
● Due to the massive import of consumer goods which could be made in
Pakistan
● Effects of the rise in Oil prices between 1970’s and 1980’s
● Pak is heavily dependant on the export of a few items like cotton, rice, leather
products, sport goods etc
● Exports of non-cotton has increasingly faced trade barriers
Measures to correct the negative BoP:
● Increasing Exports
● Restricting imports
● Curtailing imports related to the tertiary sector
How to Increase Exports:
● Exporting value added products
● Development of small scale cottage industries for export purposes
● Reducing taxes to provide incentives to exporters
● Establishment of Export Processing Zones ( EPZ’s )
Objectives of EPZ
● To boost industrialization
● To increase a country’s exports by creating facilities for local and foreign
investors
● To job Opportunities
● To transfer hi-tech from the developed world to the developing countires
Incentives for Investors to set up a unit in EPZ
● 100% ownership rights
● No minimum or maximum limit for investment