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Title The Contribution of Trade Openness and Political Stability in Promoting Inclusive Growth in Case of Pakistan

Author(s) Syeda Aliza Jaffery

Abstract The main objective of the study is to find the impact of trade openness and political stability in promoting inclusive growth of Pakistan. The study draws the attention of policy-makers towards the new development pattern that emphasizes on income as well as non-income dimensions of reducing poverty and inequality. The increasing political restlessness in the country and declining exports in the recent years have attracted the attention of many policy makers. Therefore, the impact of trade openness and political stability on inclusive growth is examined for the period of 1980-2016 using Auto Regressive Distributed Lag (ARDL). The relationship among variables: inclusive growth, trade openness, political stability, human capital and gross fixed capital formation is analyzed. To find the presence of long run relationship among variables, the bound testing approach is applied whereas Error Correction Model (ECM) is used to find out the short-run relationship among variables. The impact of trade openness on inclusive growth of Pakistan is weak due to exports of raw materials and imports of capital goods or finished goods along with weak conflict management and low quality institutions in the country. The results of long-run relationship indicate that trade openness has a significant negative relationship while human capital has a significant positive relationship with inclusive growth. However, gross fixed capital formation and political stability both have a positive relationship with inclusive growth but it is not statistically significant. The findings recommend that exports of final products can give rise to economic growth and quality conflict management institutions will be helpful for promotion of inclusive growth in society and beneficial for the betterment of the economy of Pakistan. Key Words: Inclusive Growth, Trade Openness, Human Capital

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Economics

Language English

Publication Date 2018-10-19

Subject Economics

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