This study assessed the comparative advantage of cotton production in Pakistan and determined that how far
the current set of policies is consistent with the comparative advantage. The Domestic Resource Cost (DRC),
Nominal Protection Coefficient (NPC) and Effective Protection Coefficient (EPC) were used for the analysis of
data for the harvesting years, 1998-99 to 2002-2003. The analysis was carried out in the context of Policy
Analysis Matrix (PAM). The Domestic Resource Cost (DRC) analysis for Punjab concluded that farmers in Punjab
had comparative advantage in producing seed cotton for the study period. The value of Nominal Protection
Coefficient showed that the seed cotton farmers in Punjab were taxed. This was further confirmed by the values
of Effective Protection Coefficient. The analysis showed that Sindh had more comparative advantage than
Punjab.
Keywords: Comparative advantage; DRC; NPC; EPC; Pakistan
