Impact of Trade Openness on Economic Growth: A Case Study of Pakistan
Keywords:Trade openness, Exports, Imports, Gross domestic product, Foreign direct investment, Labour force
Purpose: This paper estimates the impact of trade openness and economic
growth in Pakistan by using time series data from period of 1975-2014.
Econometric method was applied to estimate the impact of trade openness on
economic growth. Gross fixed capital formation (proxy of investment),
Foreign direct investment, Imports, Exports & trade openness (proxy of trade
openness to check the volume of trade of a country) is used as explanatory
variables while gross domestic product is treated as dependent variable in this
study. Johansson co. integration approach developed by Johannes & Jeslius
(1988) is used to evaluate the long run relationship among variables in this
study. The results suggest that trade openness, imports, exports and foreign
direct investment cast have positive impact on economic growth while on the
other hand; gross fixed capital formation &labor force has negative impact on
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