Does economic liberalization promote economic growth in Pakistan? An empirical analysis

Qazi Muhammad Hye (), Wee Yeap Lau and Marie-Aimée Tourres ()

Quality & Quantity: International Journal of Methodology, 2014, vol. 48, issue 4, 2097-2119

Abstract: The study aims to examine the short and long term impacts of economic liberalization on economic growth in case of Pakistan from 1971 to 2011. Economic liberalization consists of reforms in both trade liberalization and financial liberalization. This study contributes to the existing literature by constructing an economic liberalization index using principal component analysis. Our results show, firstly, that economic liberalization reforms have a positive impact on economic growth in the short run. However, trade liberalization is negatively associated with economic growth in the long-run. Secondly, the estimated coefficients through rolling window show that impact of economic liberalization on real GDP is unstable during the selected period of sample. This study recommends to policy makers to enhance human capital by having more expenditure on education sector. In addition, financial reforms by way of a sectoral credit allocation should be introduced to further promote the economic growth. Copyright Springer Science+Business Media Dordrecht 2014

Keywords: Economic liberalization; Economic growth; Trade liberalization; Financial liberalization; Pakistan (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11135-013-9882-9

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