Pakistan’s International Competitiveness over Asia and Europe

This study investigates Pakistan’s trading competitiveness over her trading partners using Revealed Comparative Advantage (RCA) Index, proposed by Balassa (1965). The study aims to determine competitive position of Pakistan vis-à-vis to eight Asian economies and nine European economies in some sixteen industries from 2003 to 2013.The paper intends to explore new potential markets where Pakistan could have a distinct comparative advantage over her trading partners. The industries in which Pakistan has higher revealed comparative advantage over other countries and is not currently exporting, they would be new potential markets. Result shows that Pakistan has significantly higher RCA in low value added goods. The criteria are that in those sectors where Pakistan has higher RCA and currently not exporting would be the new potential and profitable markets in the selected goods. It is recommended that Pakistan should diversify exports both in terms of markets as well as nature of goods export and would pursue those markets and sectors that provide comparatively higher margins and have more favorable terms of trade.