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Trade Liberalization and Industrial Growth in Pakistan: Co integration Analysis (1990-2017

Azam, Amir and Khan, Amir (2019): Trade Liberalization and Industrial Growth in Pakistan: Co integration Analysis (1990-2017.

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Abstract

Free trade is the absence of any restrictions either through import duties or otherwise of the commercial movements of the goods and services as well as of the finances between a particular country and the rest of the world. The importance of trade is typically expressed relative to the size of a country’s economy. Through this paper we will analyze the attempts in Pakistan to liberalize her foreign trade regime. We apply co integration analysis, which will tell us about the long run relationship between trade liberalization and industrial growth. The time period of the study has been set 1990-2017 and the Error Correction Model after the existence of co-integration is applied showing the speed of adjustment i.e. the lag of error term has been found negative and significant with existence of long run relationship between trade liberalization and Industrial Growth in Pakistan with a convergence mode of relationship that confirmed that in case of any structural change or policy shocks the relationship can be bring back to its normal position with an speed of -0.21.

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