Determinants of Export Performance in the Wake of the Global Financial Crisis: Evidence from South Asia

This study has been undertaken with a two-fold objective: Firstly, to analyse the impact of the global financial crisis on manufacturing and service exports in four South Asian countries. Secondly, to understand the determinants of export performance in a sample of exporting firms from Pakistan, India, Bangladesh and Sri Lanka. The main emphasis in this part of the analysis will be on various dimensions of the business environment in which firms operate such as the degree of competition from informal activity, prevalence of corruption and the general efficiency of the logistics industry in the economy. The study uses data provided by the Interim Enterprise Survey conducted in 2009-10. Estimation is done in three stages—first on the sample of Pakistani firms, then the pooled sample (containing firms from India, Bangladesh and Sri Lanka) and finally the pooled sub-sample (containing Indian and Sri Lankan firms only). Results reveal that for the pooled sample, the impact of the crisis on export growth becomes insignificant by 2011 which could possibly suggest that firms have recovered from the impact of the crisis by the time these firms were interviewed for the Interim Survey data collection in 2010. On the other hand for Pakistan, crisis continues to have a significant negative impact on expected export growth even after two years since the onset of the crisis—suggesting that financial markets in Pakistan are more underdeveloped relative to comparator countries of South Asia. In addition size is consistently found to be an important determinant of export growth for Pakistani firms. This implies that government policies aimed at promoting organic growth of small firms may be useful in increasing future export growth.