Gross Domestic Capital Formation, Exports and Economic Growth

Abstract

The paper analyzed the relationship between gross domestic capital formation, export and economic growth in Pakistan. Johnson's co-integration methodology is used in the study to analyzed the presence of a long term relationship between gross domestic capital formation, exports and the economic growth of Pakistan. The results showed that there is one co-integrated vector among exports, gross domestic capital formation and economic growth. Granger causality tests based on Error Correction Models have indicated that gross domestic capital formation and export influences the steady state level of GDP.

Keywords: Gross domestic capital formation, export, co-integration, Pakistan