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01-07-2014

Does economic liberalization promote economic growth in Pakistan? An empirical analysis

Authors: Qazi Muhammad Adnan Hye, Wee-Yeap Lau, Marie-Aimée Tourres

Published in: Quality & Quantity | Issue 4/2014

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Abstract

The study aims to examine the short and long term impacts of economic liberalization on economic growth in case of Pakistan from 1971 to 2011. Economic liberalization consists of reforms in both trade liberalization and financial liberalization. This study contributes to the existing literature by constructing an economic liberalization index using principal component analysis. Our results show, firstly, that economic liberalization reforms have a positive impact on economic growth in the short run. However, trade liberalization is negatively associated with economic growth in the long-run. Secondly, the estimated coefficients through rolling window show that impact of economic liberalization on real GDP is unstable during the selected period of sample. This study recommends to policy makers to enhance human capital by having more expenditure on education sector. In addition, financial reforms by way of a sectoral credit allocation should be introduced to further promote the economic growth.

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It is negatively linked with EG if the local resources of the country are unable to effectively use the technology generated by the trade openness (see Romer 1986).

Mexico, Venezuela, Costa Rica, Ecuador, Honduras, El Salvador, Paraguay, Guatemala, Dominican Republic, Colombia, Chile, Suriname, Jamaica.

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Title: Does economic liberalization promote economic growth in Pakistan? An empirical analysis
Authors: Qazi Muhammad Adnan Hye
Wee-Yeap Lau
Marie-Aimée Tourres
Publication date: 01-07-2014
Publisher: Springer Netherlands
Published in: Quality & Quantity / Issue 4/2014
Print ISSN: 0033-5177
Electronic ISSN: 1573-7845
DOI: https://doi.org/10.1007/s11135-013-9882-9

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