Impact of China–Pakistan Free Trade Agreement on Goods with Revealed Comparative Disadvantage
摘要
The paper examines the impact of an FTA on trade creation in goods for which a country did not possess a comparative advantage at the commencement of the FTA. Using the concept of revealed comparative advantage (RCA), the paper examines the impact of the China-Pakistan Free Trade Agreement (CPFTA) on the trade of goods in which neither Pakistan nor China had an RCA at the commencement of the FTA. We attempt to determine whether the FTA affected the export value of low RCA goods for each signatory. We find that in the low RCA goods, Pakistan benefited relatively more as its exports to China increased in two of the four low RCA commodity groups. In contrast, Chinese exports to Pakistan declined in three of the four low RCA commodity groups. These results suggest that FTAs may serve strategic policy goals beyond traditional welfare-based motivations, offering potential for targeted trade creation in disadvantage sectors.