Trade Horizons: A Comprehensive Study of Determinants Shaping Export Diversification in Pakistan

The present study aims at highlighting the determinants and degree diversification of export in Pakistan. The index of export’s diversification by the United Nations Conference on Trade and Development is used to calculate the degree of export diversification. Furthermore, using time series data from 1995 to 2022, present study examines the factors that influence export diversification. There are very few studies that address estimating and determinants in the context of Pakistan. To check the unit root problem Augmented Dickey Fuller test is used.  The Auto Regressive Distributive Lag method is used in this study to observe long-term relationships in the underlying variables. The regression results indicate that official exchange rates, economic globalization, and foreign direct investment negatively affect export diversification in Pakistan. While, gross fixed capital formation, world GDP per capita, term of trade, and political stability positively affect diversification of exports in the case of Pakistan.