We enshrine the free trade agreement as the fourth critical variable, as it appears to be an alternative to trade restrictions and therefore has a positive impact on exports and imports. The trade agreement is seen as one of the best ways to open up foreign markets and remove barriers between countries. Liberalisation, trade facilitation and the improvement of the free trade agreement are more important measures to facilitate trade among members, including the abolition of tariffs (Okabe 2015). However, the free trade agreement regulates tariffs and other trade restrictions between two or more countries. Grossman GM, Helpman E (1993a) The policy of free trade agreements (no. w4597). National Bureau of Economic Research, Cambridge The second critical variable is NTBj, which represents the tariff imposed by the import country and aims to limit imports and exports of goods and services through mechanisms other than simple taxation, in order to protect and develop local industry. NTB is considered another EPS and is considered to have an equivalent effect on trade. The impact of NTBs on trade flows is a significant and potentially greater barrier than other restraint measures. An increase in NB could reduce trade due to higher prices for imported products relative to domestic products. According to the World Trade Organization, non-tariff barriers include import licences, customs goods valuation rules, pre-shipment controls, rules of origin (“made in”) and trade-oriented investment measures.

The additional dummies are the common language and common framework. They appear to have a significant positive effect on bilateral trade flows. A common language (official or spoken) directly increases trade flows by 44% (Egger and Lassmann 2012). In general, the common language and the common border are measured in a binary way, depending on whether the two countries speak the same language and share the same border. Recently, the OECD meeting reported that countries with common borders tend to exchange about one-third more with each other, but this is not the case. Okabe M (2015) Effects of free trade agreements on trade in East Asia. In: ERIA Series of discussion documents. 1 (48) Grossman GM, Krueger AB (1993b) Environmental impact of the North American Free Trade Agreement. The Free Trade Agreement between the United States and Mexico, Buenos Aires Pentti (1963) Towards a General Theory of International Trade. Economiska Samfundets Tidskrift 16:69-77 Lee JW, Swagel P (2017) Barriers to trade and trade flows between countries and sectors. Rev Econ Stat 79 (3): 372-382 Y being the whole trade, matrix X contains a series of tax variables and ? is the notion of error. Beghin JC, Maertens M, Swinnen J (2015) Non-tariff measures and standards in global trade and value chains.

Annu Rev Resour Econ 7 (1): 425-450 In this study, we examined trade flows between Pakistan and its major trading partners. In 1995, Pakistan had a negative trade balance of $664 million. In 2017, Pakistan`s main export destinations are the United States ($3.56 billion), the United Kingdom ($1.63 billion), China (1.50 billion euros). USD, Germany ($1.28 billion) and Spain ($0.9 billion) and the countries of origin are China ($16.89 billion), the United Arab Emirates ($8.39 billion), the United States ($6.40 billion), Saudi Arabia ($3.06 billion) and Japan ($2.51 billion). First founded by Tinbergen (1962), followed by Pulliainen (1963) and P-nnen (1963), then Linnemann (1966), the gravity model is known in its traditional form of forecasting bilateral trade flows on the basis of economic sizes, often using GDP measures and the gap between two units.