Competitiveness and Comparative Advantage of Pakistan in Leather and Leather Products Trade: Analysis and Trends

Abstract

Livestock sector is considered the second key sector of agriculture through its share of more than half to value added and 11.8% to GDP and main source of raw material for leather industry of the country. This local availability of raw materials and low wage cost gives the country a competitive edge in the world market. This study is an effort to examine Pakistan's competitiveness of leather and leather products with a set of Revealed Comparative Advantage (RCA) and Revealed Competitive Advantage index with respect to international trade. The study has utilized Balassa index, Vollrath index and Revealed Symmetric Comparative Advantage index for empirical analysis in Pakistan during the time span from 2003 to 2014. The findings of the study illustrate that Pakistan has a high degree of comparative advantage in this sector during period under analysis which indicates the potential of leather sector exports for foreign exchange earnings. The results of the study also show that the position of Leather sector lies in the “Competitive position product group” and “Threatened product group”. There is need to strengthen comparative and competitive advantage in Leather sector by policy support and facilitating role by all stakeholders to attain the growth in livestock and agriculture sector and improve the income of related stakeholders.