Trade Liberalisation and Labour Demand Elasticities: Empirical Evidence for Pakistan

Trade has predominantly contributed in the development of world economies for more than mere agricultural development and industrialisation. Trade involves many regions across the globe. The more the regions involved, the more will be the benefits. Trade is an interaction between economies for the exchange of goods, services, skills, knowledge and expertise, which is required for bringing in the desired changes like increase in the availability of choices, reduction of extreme poverty, and enhancement of physical and mental capability. As the wave of market oriented moves has spread over the economic sphere, global trend has also been witnessed in the liberalisation of capital account, foreign exchange, credit, domestic consumption and trading sector of many countries. The concept, which has been predominantly emphasised by the economies, is that of “trade liberalisation”, which has become the key element of any development policy since late 1970s after the fundamental change in the economic policy at global level. The concept of trade liberalisation stems from Neo-liberalism thinking that has advocated market oriented economic reforms for social order and economic prosperity that aims to improve efficiency and stability in the economy. Trade liberalisation process can be defined in many different ways. In the words of Krueger (1978), “any policy, which reduces the anti export bias will lead towards liberalisation of trade and reduction in import license premium is the fundamental step towards liberalised trade regime”.