PAKISTAN’S TEXTILES AND CLOTHING IMPORTS DEMAND IN THE EU MARKET: A COINTEGRATION-ECM ANALYSIS

The study in hand analyses the importance and value of Pakistan’s textiles and clothing export to the EU. The Correlation, Co-integration and the Error Correction Model (ECM) analyses are used. The Correlation results reveal that there exists a strong degree of association between the EU’s total textiles and clothing imports and her imports of the same products from Pakistan. Same is true for three major textile and clothing categories (26, 65 and 84). The Co-integration analysis shows that there exists co-movement between the EU’s total textiles and clothing imports and her imports from Pakistan, only in case of 65-category textiles, reflecting the fact that Pakistan’s performance in this category of textiles is satisfactory, relative to the other two categories. The 84- category textile and clothing products need special attention as these are relatively more important from the value addition point of view. There is a need of conducting research for finding out and identifying the textiles and clothing products which have strong preferred market in the EU.