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Regional trade and macroeconomic indicators in Pakistan: A cointegration analysis

Author

Listed:
  • Kewal R. TALREJA

    (Department of Economics, Shah Abdul Latif University, Khairpur Mirs, Pakistan)

  • Naveed A. SHAIKH

    (Department of Economics, Shah Abdul Latif University, Khairpur Mirs, Pakistan)

  • Parveen SHAH

    (Vice Chancellor, Shah Abdul Latif University, Khairpur Mirs, Pakistan)

Abstract

This paper empirically estimates the relationship among selected variables—trade, agricultural value-added, foreign direct investments, domestic credit to private sectors, official exchange rate, gross capital formation, and population—for Southeast Asian economies including Pakistan, China, Malaysia, India, and South Korea during 1985–2016. Using the autoregressive distributed lag (ARDL) model, the study finds a long-run association among national credit to private sectors, foreign direct investment, population, and gross capital formation. Gross capital formation significantly contributes to trade in both the long and short run. While national credit, FDI, and population show a supportive but statistically insignificant relationship with trade, agricultural value-added and the official exchange rate exhibit a negative association. The findings suggest that investment in fixed assets and infrastructure is crucial for attracting FDI and boosting trade in the selected economies.

Suggested Citation

  • Kewal R. TALREJA & Naveed A. SHAIKH & Parveen SHAH, 2019. "Regional trade and macroeconomic indicators in Pakistan: A cointegration analysis," Turkish Economic Review, EconSciences Journals, vol. 6(3), pages 232-240, September.
    • Handle: RePEc:cvv:journ2:v:6:y:2019:i:3:p:232-240
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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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