The Impact of Trade Liberalization on Economic Growth: A case study of Pakistan

Abstract

This study empirically analyzes the impact of trade liberalization on the economic growth of Pakistan over the period 1972 to 2014 .Gross fixed capital formation, Trade liberalization, Labor force participation, inflation, interest rate are important explanatory variables. While economic growth which is measured by (GDP) is dependent variable used for the model specification. The study used Johensen co-integration approach developed by Johensen and Jeselius (1990).The results show that trade liberalization and gross fixed capital have positive and significant impact on economic growth. Inflation and interest rate have negative impact on economic growth. And labor force has positive impact on economic growth. Positive correlation between trade liberalization and economic growth has been explored in this study.

Keywords: Trade liberalization (LIBE), Economic growth (GDP), Co-Integration, Labour force participation (LFP), Interest rate (INT), Inflation (INF).