Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan
AbstractThe article investigates the impacts of imports and foreign capital inflows on economic growth of Pakistan over the period 1990 to 2010. We have applied the structural break autoregressive distributed lag (ARDL) bounds testing approach to cointegration to examine the long-run relationship between the variables. The vector error correction model (VECM) Granger causality multivariate framework is used to investigate the causal relationship between the series. Empirical analysis in this article confirms the long-run relationship between foreign capital inflows, imports and economic growth. The results indicate that foreign capital inflows and imports have positive and significant effect on economic growth in case of Pakistan. Causality analysis reveals the bidirectional causality between the variables, but strong causal relation is running from foreign capital inflows and imports to economic growth.
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Bibliographic InfoArticle provided by Institute of Policy Studies of Sri Lanka in its journal South Asia Economic Journal.
Volume (Year): 14 (2013)
Issue (Month): 1 (March)
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Imports; FDI; growth; Pakistan;
Other versions of this item:
- Rahman, Mohammad Mafizur & Shahbaz, Muhammad, 2011. "Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan," MPRA Paper 29805, University Library of Munich, Germany, revised 24 Mar 2011.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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