Trade Openness and Economic Growth in Pakistan: The Role of Institutions
DOI:
https://doi.org/10.61506/01.00463Keywords:
trade openness, economic growth, institutionsAbstract
More generally, the study has jumped on the bandwagon to disentangle some of the many ingredients of economic growth by exploring how institutional factors influence economic ones. We utilize time series data spanning from 1984 to 2022, which facilitates our analysis of the correlations between various variables. We draw the conclusions using the Auto Regressive Distributed Lag (ARDL) model. Long-run effects on economic growth are present and significant both from government spending-trade openness and corruption perspectives, where trade openness can have a positive impact as well. Factors such as population, gross fixed capita formation, government stability, and inflation shape the net effect on economic growth over time. One of these factors is the institutional variable of government stability, which positively influences economic growth. Furthermore, the process of controlling corruption results in economic contraction. This implies that the higher the level of corruption control, the faster economic growth will occur.
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