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Free Trade: Does Myopic Policy Overlook Long-Term Gains?

Maryiam Haroon ()
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Maryiam Haroon: Assistant Professor, Department of Economics, Lahore School of Economics

Lahore Journal of Economics, 2017, vol. 22, issue 2, 65-88

Abstract: This article analyzes the correlation between trade liberalization and welfare in Pakistan from 1986 to 2015. Using consumption expenditure as a measure of welfare, we estimate the relationship using a vector error correction model. The empirical results show that trade liberalization does not have an immediate correlation with welfare: it takes some time for liberalization policies to enhance welfare. The findings also suggest that trade liberalization can help reduce poverty, decrease inequality and increase enrollment levels in the long run. But in the short run, trade liberalization has led to higher income inequality.

Keywords: Welfare; trade liberalization; social indicators; Pakistan (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:lje:journl:v:22:y:2017:i:2:p:65-88