Trade Liberalisation and Industrial Growth in Pakistan: A Cointegration Analysis

Using the framework of an endogenous growth model, this paper empirically analyses the relationship between trade policies and industrial growth in Pakistan during the period 1973-1995. The cointegration and error correction modelling approaches have been applied. The empirical results suggest that there exists a unique long-run relationship among the aggregate growth function of industrial value added and its major determinants of the real capital stock, the labour force, real exports, the import tariff collection rate and the secondary school enrolment ratio. The short-term dynamic behaviour of Pakistan's growth function of industrial value added has been investigated by estimating an error correction model in which the error correction term has been found to be correctly signed and statistically significant. * While writing the paper, Nasiruddin Ahmed was a PhD student in The School of Economics and Political Science University of Sydney Disclaimer Notice : The responsibility for the opinions expressed in these working papers rests solely with the author(s). The School of Economics and Political Science gives no warranty and accepts no responsibility for the accuracy or the completeness of the material.