The Impact of Trade Openness on Economic Growth in Pakistan; ARDL Bounds Testing Approach to Co-integration

This paper's main objective was to investigate the impact of trade openness on economic growth in Pakistan. We have employed the Johansen and Autoregressive Distributed Lag (ARDL) Co-integration together with ECM Techniques for the period ۱۹۷۵-۲۰۱۶. The empirical estimated results are the sound evidence that there exists a short-run and long-run positive and stable cointegration among the variables. Our empirical findings show that trade openness and foreign direct investment significantly impact Pakistan's economic growth. Moreover, the Granger causality test also confirms the bidirectional causality between trade openness and economic growth. It is, therefore, concluded that trade openness can play a vital role as the economic growth of Pakistan is concerned.

Keywords:

economic growth , Trade openness , ARDL , causality , Pakistan