Impact of Export on Economic growth of Pakistan

Abstract

This research paper employed Augmented Dickey- Fuller to determine “impact of export on economic growth” while granger causality test which is statistically hypothesis test was used to determined the direction of causality between the selected variables under consideration whether selected time series is useful in forecasting. Correlation analysis was also deployed to determine the degree of relationship between the selected variables and the result shows that all the variables are highly correlated. The study uses time series data from 1992-2015, data obtained from the World Bank. The study reviles that export has an optimistic and significant impact on economic growth in Pakistan peroxide by GDP. Export was also found to be confidently and significantly impacting to economic growth in Pakistan proxied by GDP. Foreign reserve also has a optimistic and positive impact on economic growth of the country. Research result shows that the overall regression was statistically significant at both 99% and 95% level of confidence. The result of R2 (0.99) shows that the line of best fit was highly fitted. The result of the granger causality test shows that GDP granger causes Import & FDI. The research finds that, growth-export hypothesis is valid in Pakistan context. We therefore recommend among other things, that the government of Pakistan should take some necessary steps to restructure the Import sector so as to improve their contribution to the growth of Pakistani economy. The government should introduce more policies that will adequately boost the export sector of the Pakistan economy so that it will impact more meaningfully on economic growth of the Pakistan; other programs that encourages increase in foreign reserve should also be adopted in other to increase the growth of the economy in the country.