Impact of Trade on GDP Growth of Pakistan

Abstract

We used time series data from 1989 to 2019 and this article investigates the relationship between trade and GDP growth in Pakistan. GDP, exports, imports, and foreign direct investment were among the factors examined (FDI). Co-integration, descriptive statistics, as well as correlation matrix were used. The study shows that time series data variables are stable, that long-term connections exist between them, and that error correction model causes short-term balancing changes. Pakistan may enhance its exports in a variety of ways. Import and export quotas, among other trade barriers and limitations, must be removed as soon as possible. In the late 1980s, Pakistan's government implemented structural reforms for privatization, liberalization, and deregulation, catapulting the country's trade trend to new heights. Lower rates of interest can assist export businesses in boosting and increasing exports. The first and greatest policy choice or effective approach to promote exports and regulate imports is to maintain a stable exchange rate. The link between FDI and currency rates is causal. Pakistan must establish policies and practices that promote logistics and enable commerce as soon as possible.