The Impact of International Trade on Economic Growth: A Case Study of Pakistan

Abstract

This study set out to provide evidence for the international trade economic growth with a case study of Wakiso district while using exports, imports and production level as proxy variables for the period 1988-2018.Exports and imports were revealed to have a significant, positive link with economic growth that was substantiated by empirical evidence. The Augmented Dickey Fuller test was applied to conduct unit root tests, and the findings confirmed that some variables weren't level-stationary but had been changed to become stationery. Using the Engle Granger Co-integration test, co-integration was measured and found out that it was relative to the variables' long-term relationships. Within a one-year lag, the speed of long-term variable adjustment was 47 percent. Exports, imports, and output level collectively represented 88 percent of the changes in economic growth. Other variables in the error term, which were not included in the model, accounted for 25% of the fluctuations in the economy's growth. Exports and imports have a considerable impact on economic growth in the short run, as shown by the statistical significance of the F statistic. The results of the autoregressive distributed lag model technique, which was applied, validated the export led hypothesis over the long run, but not over the short run. As opposed to policies that would increase exports, he suggested liberalizing trade policy. Romanus & Dickson (2019) have examined the relationship between exports and economic growth in the Tanzanian context during the years 1980 to 2015. The percentage change in products sold overseas is being used to compute exports. findings show a longrun relationship between exports and economic growth. They insist that there is a need to review export strategies and policies in order to strengthen the economic growth levels in Tanzania. The Granger Causality test was applied for finding causality between import and economic growth. The results indicated a significant relationship between import and economic development for all six countries. The same analysis has also been conducted for OECD countries by Tahir (2013). The result showed that increase in import is significantly stored with economic growth