The Linkage between Trade Liberalization and Economic Growth: Empirical Evidence from Pakistan
Abstract
With globalization, the issue of trade liberalization and maintaining sustainable economic growth has captured worldwide attention and, therefore comes to be the principle in developing countries. This study aims to examine the impact of trade liberalization on the economic growth of Pakistan over the period of 1976-2022. To capture the impact of trade deficit, three trade-growth models, using three trade proxies, were estimated using the ARDL-bound cointegration approach. Findings revealed that the impact of trade liberalization, in the first two models, was found homogeneous in terms of relationship with economic growth. In contrast, its impact in the third model was found negative. A possible justification for this diversion was the sign of net exports, which remained negative over the sample period. The trade deficit was the main cause of sluggish economic growth in Pakistan. Along with various other policy initiatives like increasing energy supply to export-oriented sectors at competitive rates and strengthening trade relations with trading partners, out-of-the-box solutions like capitalizing on IT exports and online marketing are recommended to enhance the efficiency and earning of the export industry. Along with being competitive, it is also essential to align exports with market trends at internationally certified standards for increasing exports, curtailing trade deficits, and stimulating economic growth.
Copyright Notice Submission of an article implies that the work described has not been published previously (except in the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, in English or in any other language, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication. Copyrights for articles published in IJSSA journal are retained by the authors, with first publication rights granted to the journal. The journal/publisher is not responsible for subsequent uses of the work. It is the author’s responsibility to bring an infringement action if so desired by the author.
