INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS An Econometric Analysis of Export -Led Growth Hypothesis: Reflections from Pakistan (original) (raw)

Objectives: Income equalities in Pakistan have been a major obstacle to the economic growth of Pakistan. This led to serious economic threats to the economy in the shape of low GDP growth and precariously low foreign exchange reserves. In search of alternatives we find that a shift in goals of economy, from inward to outward orientation, is imperative. This shift calls for a change in production line focusing the demand arising from global markets rather than being confined to meet very limited home market. The purpose was to investigated the validity of export-led growth hypothesis in Pakistan and in case results are positive and significant the making recommendations to the policy makers for modalities. This study used twenty seven years quarterly time series data from Pakistan. To investigate the efficacy of export-led growth hypothesis we used the quarterly time series data running from 1971 to 2007 for Pakistan. This study has applied the co-integration technique and error correction model to investigate the relationship among the export import and GDP growth. We used the unit root test (ADF) for checking the stationarity of the variables and the variables were stationary at first difference which enable us to use co-integration technique. We should conclude and recommend policy implication through this estimation in short run and long run perspective. The research will be useful for policy makers in Pakistan as it gives important suggestions to step up the measures for boosting experts and make arrangements to the diversification of exportable goods production. Of course the earnings of service sector to other countries like tourism, health & education etc.is not preview of this study. However that constitutes a significant part of balance of payment. So this area should be given the due attention.

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