Do Economic, Institutional, or Political Variables Explain Economic Growth (original) (raw)
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IMPACT OF TRADE OPENNESS AND MACROECONOMIC VARIABLES ON GDP GROWTH OF PAKISTAN
Paradigms: A Research Journal of Commerce, Economics and Social Sciences ISSN 1996-2800, 2013, Vol. 7, No. 1, pp. 37-47., 2013
This study is about the impact of trade openness and selected macroeconomic variables on economic growth of Pakistan. Economic growth of Pakistan is measured interms of annual nominal GDP growth rate. Trade openness, employment rate, exchange rate, foreign direct investment and inflation rate are taken as independent variables in this study. Augumanted Dickey Fuller (ADF) test is applied to check unit root problem, which is not found in the data. Johansen Co-integration test is used and reuslts of all the variables are significnat, indicating that there exists long term relationship among the variables. Ordinary Least Square (OLS) method is then applied to check the causal effect of exogenous variables. Results show that all variables are co-integrated at 5% level of significance.
Abasyn Journal of Social Sciences, 2019
Per Capita Income and productivity of industrial sector are very low in developing nations including Pakistan as compared to developed nations. Three reasons have been mentioned in the literature for this difference; geographical differences, role of international trade and the quality of institutions.This study examines the short run and long run impacts of trade openness, and quality of institutions, on the growth of industrial sector of Pakistan, using time series data over the period of 1984-2013.TheCobb- Douglas production function has been augmented by adding quality of institutions, trade openness, and financial development variables to probe their impacts on the industrial growth. The most recently developed combined cointegration technique by Bayer and Hanck (2013) has been usedto check the cointegration among the variables. Long run empirical results show that trade openness, and quality of institutions positively contributes to the growth of industrial sector. These resul...
An Analysis of the Impact of Government Size on Economic Growth of Pakistan: An Endogenous Growth
Keeping in view the importance of economic growth in a country " s development, this study intended to examine the relationship between the government size and other determinants on economic growth using a time series data over the period 1973-2012. To specify the growth equation, we have followed the Barro (1990) model of endogenous growth. The exogenous variables in the model consisted of the government size, employment, inflation, capital and trade openness. To examine the impact of the 9/11 incident, the earth quake in 2005 and financial crises, we have introduced three dummies in our growth equation. Keeping in view the nature of variables and possible endogenity in the model, we have used the VAR methodology which is believed to overcome the possible endogenity. The estimation strategy comprised of two steps. In the first step, we have estimated the long run growth equation using the Johansen co-integration technique. In the second step, we have estimated the ECM model to arrive at the short run growth elasticities with respect to the variables concerned. The long run results indicated that almost all the variables have found out to be significant with their expected signs except for trade openness which carried negative coefficient. The negative and significant coefficient of the government size suggested that large government size negatively affect economic growth of Pakistan. On the other hand, the positive and significant coefficient of capital indicated that increase in capital holdings enhances economic growth. The positive and significant long run coefficients of inflation and employment highlight that economic growth increase along with increase in inflation and employment. The trade openness variable was found to be significant with positive sign which is the only significant variable in the ECM model except the dummies. The ECM term in the error correction model has carried out significant coefficient with negative sign and plausible magnitude that highlights the stability of the model.
Internal and External Determinants of Economic Growth: A closer look at Pakistan’s Economy
Romanian Economic Journal, 2013
This study aims to investigate the impact of internal and external determinants of economic growth on the economic growth of Pakistan. Major internal determinants include stock of physical capital and developmental expenditures, while external determinants include trade openness and real effective exchange rate. In doing so, study utilizes the annual time series data from 1972 to 2011. Advanced Autoregressive Distributed Lag model (ARDL) approach has been employed for co-integration and error correction model (ECM) for short-run results. Empirical investigations indicate that developmental expenditures, physical capital and trade openness are positively correlated with economic growth in long run, while real effective exchange rate negatively and significantly affect economic growth in long run in case of Pakistan.
Trade Openness and Economic Growth: A Lesson from Pakistan
This article is an attempt to examine the comparative effect of three different measures of trade openness on the economic growth in Pakistan by using more rigorous econometric techniques. Autoregressive distributed lag (ARDL) method, JJ COintegration and ordinary least square (OLS) results suggest significant positive long run relationship between export and economic growth. In contrast, total volume of trade and imports have significant negative effect on the economic growth. The addition of variables and results of fully modified ordinary least square (FMOLS) suggest that the results are robust. The Granger causality and variance decomposition analysis indicate the unidirectional causality between trade openness and economic growth. In export model, causality runs from export to growth. Whereas, in the model with total volume of trade and import, causality runs from growth to total volume of trade, and imports in Pakistan. From the findings it is concluded that the policy makers should focus on export promotion strategy to enhance the economic growth in Pakistan. Besides, efficient utilization of capital goods should be ensured and reliance on non-capital goods should be less in order to ensure high domestic production in the country.
Trade Openness and Economic Growth Nexus in Pakistan
Global Economics Review, 2020
This study explores the nexus amongst trade openness and economic growth for Pakistan for 1981-2019. Trade-openness is a dependent variable, and it is measured as imports plus exports to GDP ratio. Economic growth, Foreign Direct Investment, Inflation, Exchange rate, and interest rate are taken as explanatory variables. Co-integration approach by Johansen and Juselius (1988, 1991) has been used for long-run relationships. Results indicate that Trade-Openness has significantly affected the economic growth and other control variables of the study for Pakistan. There exist bidirectional Granger Causality in the selected variables.
International Journal of Accounting and Financial Reporting, 2014
This study focuses on empirical analysis to find out the role of trade openness, inflation, imports, exports, real exchange rate and foreign direct investment in enhancing economic growth in Pakistan. The analysis based on time series data for the period 1980 to 2011. This paper uses ADF; PP and DF-GLS tests to find out stationarity of the variables and Co-integration and DOLS (Dynamic Ordinary Least Square) techniques have been used for the estimation. Co integration results indicated the long run relationship among the variables. However, negative impact of trade openness can be overcome by producing import substitutes and creating conditions for trade surplus. Furthermore, foreign direct investment and trade are considered vital elements that improve the influence of economic growth.
Key Factors Affecting GDP in Pakistan Over the period 1975-2011
The main objective of this study was to investigate the impact of key factors like agriculture, industrial, the services sectors output, exchange rate and the trade openness on the economic growth in Pakistan. To fulfill the objective of the study, time series data spreading over the last 37 years (1975-2011) were collected from World Development Indicator (WDI). The empirical analysis started by analyzing the time series property of the data which was followed by checking the stationarity of all dependent and independent variables. The Johansen VAR-based Co-integration approach was applied to examine the sensitivity of real economic growth to changes in the explanatory variables in the long-run. The estimated coefficients of agriculture, services, industrial output, trade openness and the exchange rate positively and significantly affected the real GDP by 0.05, 0.42, 0.35, 0.025, and 0.062 percent respectively. The most significant factor identified, having impact upon the real GDP was the industrial output. It was contributing 0.42 % toward the real GDP.