Exports-Led Growth Hypothesis: The Econometric Evidence from Pakistan

Canadian Social Science, Vol. 11, No. 7, 2015

10 Pages Posted: 14 Aug 2015

See all articles by Dr. Furrukh Bashir

Dr. Furrukh Bashir

University of the Punjab (PU) - Department of Economics; The Islamia University of Bahawalpur, Pakistan

Mujahid Iqbal

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE)

Ismat Nasim

Bahauddin Zakariya University

Date Written: August 12, 2015

Abstract

The study aims at investigating the Export-led growth hypothesis in Pakistan by applying Unit root test, Cointegration, Vector error model and Granger causality tests. Time series data of the selected variables (Real GDP, capital, employed labor force, exports, consumer price index and terms of trade) for the period of 1972-2012 is used for analysis. The export-led growth hypothesis claims that exports positively contribute to economic growth. The results revealed that there is a strong positive long run as well as short run relationship between exports and economic growth in Pakistan. It is recommended on the basis of findings that the government should announce export bonus, export financing and export credit guarantee schemes to encourage the exports. Export processing zones should be established. These zones will not only catch the attention of foreign investors but also provide access to international markets to Pakistani exporters.

Keywords: Export-led growth; Co-integration; Vector error model; Granger causality; Econometric evidence

Suggested Citation

Bashir, Furrukh and Iqbal, Mujahid and Nasim, Ismat, Exports-Led Growth Hypothesis: The Econometric Evidence from Pakistan (August 12, 2015). Canadian Social Science, Vol. 11, No. 7, 2015. Available at SSRN: https://ssrn.com/abstract=2643066

Furrukh Bashir (Contact Author)

University of the Punjab (PU) - Department of Economics ( email )

Lahore
Pakistan

The Islamia University of Bahawalpur, Pakistan ( email )

Bahawalpur, Punjab 63100
Pakistan

Mujahid Iqbal

Quaid-i-Azam University - Pakistan Institute of Development Economics (PIDE) ( email )

Quaid-i-Azam University Campus
P.O.Box 1091
Islamabad, Federal Capital 44000
Pakistan

Ismat Nasim

Bahauddin Zakariya University ( email )

Bosan Road
Multan, PA Punjab 60800
Pakistan

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