A Practical Narrative of Tariff Protection in Pakistan

Abstract

This research work quantifies the changes in effective rates of protection in Pakistan during the last decade of 2011–20. Based on its results, it supports a more flexible trade policy in Pakistan. Further, it identifies the sectors with strong and weak long-run productive capacities and highlights the role of trade barriers in these industries. A key concern is the decreasing productive capacity of textile and leather sectors where the textile industry has the largest share in the total exports from Pakistan. Hence, there is a dire need to invest more in research and development activities in such industries. Finally, the country needs to increase its range of export items and export destinations with more favourable terms of trade, which can be achieved by reducing its historically high import tariff rates. Effective Rate of Protection, Input-Output Table, Industry, Trade, Pakistan JEL Classification: C67, D57, F6, L5, R15