The Effect of Trade Liberalization on the Economy of Pakistan: A Time Series Data Analysis

Authors

Muhammad Kamran Bhatti(1) Muhammad Kamran Bhatti Corresponding author Affiliation School of Economics and Trade, Hunan University, Changsha, 410082, China Email addresskamran.bhatti977@gmail.com Other articles by this author , Muahmmad Abdullah Khan(2) Muahmmad Abdullah Khan Affiliation School of Economics and Trade, Hunan University, Changsha, 410082, China Other articles by this author , Ali Hassan(3) Ali Hassan Affiliation School of Economics and Trade, Hunan University, Changsha, 410082, China Other articles by this author , Muhammad Ali Husnain(4) Muhammad Ali Husnain Affiliation School of Economics and Trade, Hunan University, Changsha, 410082, China Other articles by this author

  1. School of Economics and Trade, Hunan University, Changsha, 410082, China
  2. School of Economics and Trade, Hunan University, Changsha, 410082, China
  3. School of Economics and Trade, Hunan University, Changsha, 410082, China
  4. School of Economics and Trade, Hunan University, Changsha, 410082, China

https://doi.org/10.36923/jcmi.v4i2.566

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Abstract

The purpose of this research was to learn how freer trade affects a country's GDP. The data was used from the period 1972 to 2021, we tested the impact of several independent indicators on the dependent variable of GDP per capita. These variables included trade openness, labor force participation rate, foreign direct investment, exchange rate, and trade openness multiplied by the exchange rate. The stationarity of the data was tested using unit roots, and cointegration analysis and relationship estimation were performed using the OLS (least square) method. The OLS analysis showed that the GDP per capita in Pakistan was positively and significantly influenced by trade openness, the labor force participation rate, FDI, and the exchange rate. A negative and statistically significant effect on Pakistan's GDP per capita was nevertheless found for the interaction term of trade openness multiplied by the exchange rate.

Article information

Keywords
Trade liberalizationLFPRFDIrate of exchangePakistan
Section
Articles
Issue
Vol. 4 No. 2 (2023)
Submitted
December 26, 2023
Accepted
December 30, 2023
Published
December 31, 2023
Corresponding author
Muhammad Kamran Bhatti
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