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Trade Liberalization and Industrial Growth in Pakistan: Co integration Analysis (1990-2017


  • Azam, Amir
  • Khan, Amir


Free trade is the absence of any restrictions either through import duties or otherwise of the commercial movements of the goods and services as well as of the finances between a particular country and the rest of the world. The importance of trade is typically expressed relative to the size of a country’s economy. Through this paper we will analyze the attempts in Pakistan to liberalize her foreign trade regime. We apply co integration analysis, which will tell us about the long run relationship between trade liberalization and industrial growth. The time period of the study has been set 1990-2017 and the Error Correction Model after the existence of co-integration is applied showing the speed of adjustment i.e. the lag of error term has been found negative and significant with existence of long run relationship between trade liberalization and Industrial Growth in Pakistan with a convergence mode of relationship that confirmed that in case of any structural change or policy shocks the relationship can be bring back to its normal position with an speed of -0.21.

Suggested Citation

  • Azam, Amir & Khan, Amir, 2019. "Trade Liberalization and Industrial Growth in Pakistan: Co integration Analysis (1990-2017," MPRA Paper 96597, University Library of Munich, Germany, revised 18 Aug 2019.
  • Handle: RePEc:pra:mprapa:96597

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    References listed on IDEAS

    1. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
    2. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
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    More about this item


    Trade Liberalization; Industrial Growth; Error Correction Model; Pakistan;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction

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