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Causality between exports, world income and economic growth in Pakistan

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  • Mohammad Afzal

Abstract

This paper investigates the direction of causation between GDP representing economic growth, exports and its different categories, imports and world income. After experiencing vigorous import-substitution in the past decades, Pakistan adopted an outward-looking strategy in the late 1980s with an emphasis on export promotion. A strong and stable relationship between GDP and exports and bi-directional causality between manufactured exports and GDP has been found. Export promotion policy is pursued consistently with an emphasis on manufactured exports and this is most likely to contribute adequately to economic growth in the long run.

Suggested Citation

  • Mohammad Afzal, 2006. "Causality between exports, world income and economic growth in Pakistan," International Economic Journal, Taylor & Francis Journals, vol. 20(1), pages 63-77.
  • Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:63-77
    DOI: 10.1080/10168730500515399
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    References listed on IDEAS

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    1. 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.
    2. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    3. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-472, August.
    4. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    5. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    6. Salvatore, Dominick, 1983. "A Simultaneous Equations Model of Trade and Development with Dynamic Policy Simulations," Kyklos, Wiley Blackwell, vol. 36(1), pages 66-90.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    8. James G. MacKinnon, 1990. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
    9. Zafar Mahmood & Mohammad Ali Qasim, 1992. "Foreign Trade Regime and Savings in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 883-893.
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    Cited by:

    1. El Alaoui, Aicha, 2015. "Causality and cointegration between export, import and economic growth: evidence from Morocco," MPRA Paper 65431, University Library of Munich, Germany.
    2. Chaudhry, Azam & Bukhari, Syed Kalim Hyder, 2013. "A structural VAR analysis of the impact of macroeconomic shocks on Pakistan's textile exports," Economic Modelling, Elsevier, vol. 32(C), pages 302-315.
    3. Mohammad Afzal, 2007. "The Impact of Globalisation on Economic Growth of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 723-734.

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