The paper evaluates the effective incentives in terms of level of protection in cotton production under different scenarios for the period 1990-91 to 2004-05 in Pakistan. Secondary data from different official sources were used to derive the necessary indicators used in the analysis. NPC and NRP were measured at official and shadow exchange rates. The objective of the paper is to examine the incentive structure prevailing in cotton production of Pakistan through analysis of the level of protection. The results indicate that on average cotton was neither protected nor disprotected substantially at the prevailing exchange rates under an exportable scenario with the exception of few years, whereas overall protection to cotton producers has been negative under exportable and importable scenarios with a shadow exchange rate.


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