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Do Structural Transformation And Trade Liberalisation Cause Economic Growth In Pakistan?

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  • Muhammad AFZAl
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    Abstract

    Developing countries inherited weak and underdeveloped economies from colonial rulers. During the three decades (1950s, 1960s, 1970s) developing countries experimented with diverse development theories. During 1980s these countries faced current account and fiscal deficits problems. World Bank and IMF are playing a leading and dominant role to influence macroeconomic policies of the developing countries. We used four measures (two for liberalization and two for structural transformation) to empirically investigate the aforesaid policies in the context of Pakistan’s economy Empirical results show that except industry other variables (agriculture, openness, and financial integration) are not cointegrated. Openness Granger-causes economic growth that implies, on one hand, increasing international dependence of Pakistan’s economy particularly imports and on the other hand, partially supports the neoclassical view. There is long-run relationship between economic growth and structural transformation Use of traditional measures of openness and structural transformation suggests that the results are interpreted with care... Trade liberalisation is not necessarily a universal remedy.

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    Bibliographic Info

    Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

    Volume (Year): 12 (2012)
    Issue (Month): 1 ()
    Pages:

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    Handle: RePEc:eaa:aeinde:v:12:y:2012:i:1_14

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    Related research

    Keywords: Structural transformation; Trade Liberalisation; Cointegration; Causality; Pakistan;

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    References

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    1. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, Octomber.
    2. MacKinnon, James G & Haug, Alfred A & Michelis, Leo, 1999. "Numerical Distribution Functions of Likelihood Ratio Tests for Cointegration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 563-77, Sept.-Oct.
    3. R. Scott Hacker & Abdulnasser Hatemi-J, 2006. "Tests for causality between integrated variables using asymptotic and bootstrap distributions: theory and application," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1489-1500.
    4. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-18, Nov.-Dec..
    5. Muhammad Tariq MAJEED, 2010. "Inequality, Trade Openness And Economic Growth In Asia," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
    6. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
    8. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
    9. Ashfaque H. Khan & Afia Malik & Lubna Hasan, 1995. "Exports, Growth and Causality: An Application of Co-integration and Error-correction Modelling," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 1001-1012.
    10. Mohammad Afzal & Ijaz Hussain, 2010. "Export-Led Growth Hypothesis: Evidence from Pakistan," Journal of Quantitative Economics, The Indian Econometric Society, vol. 8(1), pages 130-147, January.
    11. Karras, Georgios, 2003. "Trade Openness And Economic Growth Can We Estimate The Precise Effect?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(1).
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