Global value chain participation and the role of free trade agreements in Pakistan

Batool Bushra and Hiroyuki Taguchi ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study used a structural gravity trade model and the Trade in Value-Added database of the Organization for Economic Cooperation and Development to examine how free trade agreements (FTAs) impact global value chain (GVC) participation in Pakistan. This study contributes to the literature by enriching evidence regarding the relationship between FTAs and GVCs, an issue rarely addressed in prior research. The study found that South Asian FTA terms related to the relationship between Pakistan and India, and Pakistan’s FTAs with China and Malaysia facilitated backward GVC participation in Pakistan by increasing foreign value-added inputs from India, China, and Malaysia into Pakistan’s exports. The implication for policymakers is that potential exists for exploring GVC activities because some GVC linkages, such as those between Pakistan and Bangladesh, remain underdeveloped.

Keywords: South Asian Free Trade Agreement; global value chains; backward GVC participation; structural gravity trade model; Trade in Value-Added database (search for similar items in EconPapers)
JEL-codes: F13 F14 O53 (search for similar items in EconPapers)
Date: 2026-03
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