Long term effect of trade openness on economic growth in case of Pakistan |
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| Authors: | Qazi Muhammad Adnan Hye |
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| Institution: | (1) Department of Management Science, COMSATS Institute of Information and Technology, Abbottabad, Pakistan;(2) Pakistan Institute of Development Economics, Islamabad, Pakistan;(3) Department of Economics, Quaid-i-Azam University, Islamabad, Pakistan;(4) Department of Anthropology, Quaid-i-Azam University, Islamabad, Pakistan |
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| Abstract: | The present empirical work aims to investigate the long term effect of trade openness on economic growth in the case of Pakistan from 1971 to 2009. A composite trade openness index is developed by using principal component analysis (PCA) and is employed in the JJ cointegration, autoregressive distributed lag (ARDL) approach to cointegration, dynamic OLS and variance decomposition. The results suggest the existence of a negative and significant association between trade openness and economic growth. But new evidence provided by this study is that there is a strong complementary between human capital and trade openness index in terms of enhancing the real GDP. |
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