Drivers of Export Supply in SAARC: Investigating the Cross Evidence From Afghanistan

Abstract

Recognising the significance of international trade in economic growth, this research explores the drivers of exports in South Asian Association for Regional Cooperation countries from 2008 to 2021. The study employs the export demand model and the augmented exports supply model and utilises pooled time-series data. This study questions whether export supply decisions are based on traditional trade model factors, emerging trading realities or macroeconomic variables. The model based on fixed effects evaluates the connection between exports and their possible drivers. Traditional export supply models suggest determinants like production capacity, variable cost and relative pricing influencing South Asian export supply performance substantially. Changes in trade, for example, have a substantial impact on export supply, demonstrating that the trade liberalisation procedure promotes growth in exports, compression in imports and technological advancement. The worsening state of the energy industry and growing levels of corruption have proved to be significant deterrents to export supply decisions. The results verify foreign direct investment's positive and medium influence on the expansion of exports. Other variables, however, such as GDP and its growth, Official Development Assistance (ODA), development expenditure, indirect taxation, labour supply and the exchange rate of currencies, have a positive impact on the flow of exports. Furthermore, the data corroborate the notion that increased savings have a significant beneficial influence on the flow of exports. The study proposes that concerned governments examine their export policies and adopt new policies adapted in accordance with changing circumstances with the goal of increasing and enhancing the performance of exports.

Citation

Wani, N.U.H. (2024), "Drivers of Export Supply in SAARC: Investigating the Cross Evidence From Afghanistan", Policy Solutions for Economic Growth in a Developing Country, Emerald Publishing Limited, Leeds, pp. 61-82. https://doi.org/10.1108/978-1-83753-430-220241004