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Exchange rate depreciation and export price competitiveness: the case of Pakistani manufacturing industries

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  • Uzma Zia
  • Zafar Mahmood
Abstract
Export price competitiveness assessment is a vital component in evaluating a country's macroeconomic performance and sustainability of its policies. It is generally argued that exchange rate depreciation stimulates exports and curtails imports, while exchange rate appreciation harms exports and stimulates imports. At times favourable factors (such as currency depreciation), however, may not result into increased exports because exchange rate movements affect exports not only by means of its depreciation but also through its variability (risk). In this paper, the above prediction has been assessed by considering the co-existence of import content in production of exportables and dynamic productivity gains. Results show that in the manufacturing sector of Pakistan, the exchange rate volatility partially offset the positive effect of depreciation on exports, that is, volatility in exchange rate has resulted into a decrease in export price competitiveness despite currency depreciation and, hence, the country experienced a slow growth in manufactured exports.

Suggested Citation

  • Uzma Zia & Zafar Mahmood, 2013. "Exchange rate depreciation and export price competitiveness: the case of Pakistani manufacturing industries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(4), pages 529-542.
    • Handle: RePEc:taf:rjapxx:v:18:y:2013:i:4:p:529-542
    DOI: 10.1080/13547860.2012.742722
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    Citations

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    Cited by:

    1. Uzma Zia & Fozia Tabussom, 2023. "Impact of Export Financing Schemes on Export Performance Qualitative Approach," PIDE-Working Papers 2023:13, Pakistan Institute of Development Economics.
    2. Ejaz Ghani & Musleh ud Din & Afia Malik, 2017. "An Assessment of Pakistan's Export Performance and the Way Forward," Working Papers id:12173, eSocialSciences.
    3. Malik, Saif Ullah, 2014. "Determinants of Currency Depreciation in Pakistan," MPRA Paper 54734, University Library of Munich, Germany.
    4. repec:lje:journl:v:20:y:2015:i:2:p:99-127 is not listed on IDEAS
    5. Yensen Ni & Min-Yuh Day & Paoyu Huang, 2020. "Trading stocks following sharp movements in the USDX, GBP/USD, and USD/CNY," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-17, December.
    6. Víctor Manuel Cuevas Ahumada & Cuauhtémoc Calderón Villarreal, 2023. "Government policies and manufacturing production during the COVID-19 pandemic," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 18(4), pages 1-19, Octubre -.
    7. Afia Malik & Ejaz Ghani & Musleh ud Din, 2017. "An Assessment of Pakistan’s Export Performance and the Way Forward," PIDE-Working Papers 2017:153, Pakistan Institute of Development Economics.

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