Analyzing the Role of Trade Openness in Economic Growth of Pakistan


  • Gulzar Ali Department of Economics, Islamia College University Peshawar, KPK, Pakistan
  • Sara Rafiq Department of Economics, Women University Mardan, KPK, Pakistan



Trade Openness, Economic Growth of Pakistan, ARDL Approach


Trade openness is a vivid indicator of emerging economies & one of the most important determinants of growth. Therefore, quite a number of researchers have endeavored to analyze the significance & impact of trade openness on economic growth for various economies. Generally, the theoretical framework supports the constructive & positive impact of economic openness of a country for its overall economic development; however, there are mixed outcomes of empirical findings, especially for developing countries that experience fluctuations in their economic growth rate. This research work has employed trade to GDP ratio as a proxy variable for trade openness to examine its effect on the growth of Pakistan. The finding of this study does not reveal any considerable effect of trade liberalization during 1972-2016 on the growth of the Pakistan economy. The study concludes its premise based on empirical results that those economies that have a comparative advantage in trade with significant competitiveness usually benefit from liberalization, export promoting, and diversifying policies. The trading partners of Pakistan were and are mostly Western countries that have the comparative advantage of trade over Pakistan. Therefore, the government of Pakistan needs to promote & diversify its exports to those countries in which Pakistan has a comparative advantage in the international market.


Download data is not yet available.


Adebiyi, M. A., and Ros, D. (2006). Trade Liberalization Policy and Industrial Growth Performance in Nigeria: An Error Correction Mechanism Technique. The Nigerian Journal of Economic and Social Studies 42 (1), 1 – 22.

Afzal. (2009). Impact of Trade Liberalization on Economic Growth of Pakistan. Pakistan Development Review, 7 (1), 69-68.

Akmal, M. S., Ahmad, M. Q., Ahmad, H. M., and Butt, S. M. (2007). An Empirical Investigation of the Relationship between Trade Liberalization and Poverty Reduction: A Case for Pakistan. The Lahore Journal of Economics, 12 (1), 99-118. DOI:

Awokuse, T. (2007). Causality between Exports, Imports, and Economic Growth: Evidence from Transition Economies. Economics Letters, Elsevier Publisher, 94 (3), 389-395. DOI:

Blattman, C., Hwang, J., & Williamson, J. G. (2003). The terms of trade and economic growth in the periphery 1870-1938 (No. w9940). National Bureau of Economic Research. DOI:

Burger, M., Frank van, O., and Gert-Jan, L. (2009). On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros, and Zero-Inflated Estimation. Spatial Economic Analysis, 4(2), 167-190. DOI:

Freund, C., and Bolaky, B. (2008). Trade, regulations, and income. Journal of Development Economics, 87 (1), 309-321. DOI:

Georgios, K. (2003). Trade Openness and Economic Growth: Can We Estimate the Precise Effect? Applied Econometrics and International Development, 3(1), 7-26.

Mohey-ud-Din, G. (2007). Impact of Foreign Capital Inflows (FCI) on Economic Growth in Pakistan [1975-2004]. Journal of Independent Studies and Research (JISR), 5(1), 24-29. DOI:

Gomes, F. A. R., and L. S. Paz. (2005). Can real exchange rate devaluation improve trade balance? The 1990-1998 Brazilian case. Applied Economics Letters, 12 (9), 525-528. DOI:

Greenaway, D., Morgan, W., and Wright, P. (2002). Trade Liberalization and Growth in Developing countries. Journal of Development Economics, 67 (1), 229-244. DOI:

Hamid, M. H. (2013). Is There Really Any Impact of Trade Openness, FDI Inflows, and Exports on the Economy Growth? Journal of Contemporary Issues in Business Research, 2 (3), 89-96.

Hassan K. A. F. M., and Islam, M. R. (2005). Temporal Causality and Dynamics of Financial Development, Trade Openness, and Economic Growth in Vector Auto Regression (VAR) for Bangladesh, 1974-2003: Implication for Poverty Reduction. The Journal of Nepalese Business Studies, 2(1), 1-12. DOI:

Jin, J. C. (2003). Exports and Growth: Is the Export-Led Growth Valid for Provincial Economies? Applied Economics, 34 (1), 203-215. DOI:

Ju, J., Wu, Y., and Zeng, L. (2010). The Impact of Trade Liberalization on the Trade Balance in Developing Countries. IMF Staff Papers, 57 (2), 427−49. DOI:

Khan, A. E. R. and Sattar, R. (2010). Trade Growth and Poverty: A Case of Pakistan. Pakistan Journal of Social Science, 4 (2), 173-184.

Kolstad, I. (2009). The Resource Curse: Which Institutions Matter? Applied Economics Letters, 16 (4), 439-442 DOI:

Lardy, N. R. (2003). Trade Liberalization and Its Role in Chinese Economic Growth. Institute for International Economics, International Monetary Fund, Washington, D.C, 2003.

Liu X., Song, H., and Romilly, P. (1997). An Empirical Investigation of the Causal Relationship between Openness and Economic Growth in China. Applied Economics, 29 (1), 1679-1686. DOI:

Mehlum, H., Moene, K., and Torvik, R. (2006). Institutions and the Resource Curse. The Economic Journal, 116, 1-20. DOI:

Moulton, B. R. (1986). Random Group Effects and the Precision of Regression Estimates. Journal of Econometrics 32 (3), 385-397. DOI:

Musleh-Ud Din. (2004). Exports, Imports, and Economic Growth in South Asia: Evidence using a Multivariate Time Series Framework. Pakistan Development Review, 43 (2), 105-124. DOI:

Njikam, O. (2003). The Effects of Trade Liberalization on Productive Efficiency: Some Evidence from the Electrical Industry in Cameroon. Research Paper African Economic Research Consortium, Nairobi.

Pesaran, M. H., Shin, Y., and Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Economy, 16 (1), 289–326. DOI:

Powell, J., and Nourzad, F. (2003). Openness, Growth, and Development: Evidence from a Panel of Developing Countries. Scientific Journal of Administrative Development, 1 (1), 72-94.

Rahman, M. M. (2004). The Determinants of Bangladesh’s Trade: Evidence from the Generalized Gravity Model. The Economic Society of Australia’s 33 Conference of Economists, University of Sydney, Australia.

Santos-Paulino, and Thirlwall, A. P. (2004). The Impact of Trade Liberalization on Exports, Imports, and the Balance of Payments of Developing Countries. Economic Journal, 114 (1), 50−72. DOI:

Santos, S., Joao, M. C., and Tenreyro, S. (2006). The Log of Gravity. Review of Economics and Statistics 88(4), 641-658. DOI:

Seemab, S., Safia, Q., Roohi, A., and Noreen, M. (2010). Trade Liberalization, Economic Growth, and Poverty in case of Pakistan. Journal of Development Studies, 31 (1), 29-36.

Shahbaz, M., Jalil, A., and Islam, F. (2011). Real Exchange Rate Changes and Trade Balance in Pakistan: A Revisit. Munich Personal RePEc Archive, Paper No. 27631.

Siddiqui, A. H., & Iqbal, J. (2005). Impact of trade openness on output growth for Pakistan: An empirical investigation.

Umer, F. (2014). Impact of Trade Openness on Economic Growth of Pakistan: An ARDL Approach. Journal of Economics and Business Policy, 1(1), 39-70.

Yasmin, B., Jehan, Z., and Chaudhry, M. A. (2006). Trade Liberalization and Economic Development: Evidence from Pakistan. Lahore Journal of Economics, 11 (1), 19-34. DOI:




How to Cite

Ali, G., & Rafiq, S. (2019). Analyzing the Role of Trade Openness in Economic Growth of Pakistan. JISR Management and Social Sciences & Economics, 17(2), 109–120.



Original Articles

Similar Articles

You may also start an advanced similarity search for this article.