ARDL – Analysis of the Relationship among Exports, FDI, Current Account Deficit and Economic Growth in Pakistan

Abstract

T his paper empirically examines the relationship among exports, foreign direct investment, current account deficit and economic growth in Pakistan during the period 1975-2016.We adopted the autoregressive distributed lag (ARDL) approach to co-integration together with ECM techniques to trace the long-run as well as the short-run relationships. The results demonstrate the existence of a positive and significant relationship among exports, foreign direct investment and economic growth both in the long-run and short-run in Pakistan. While, results depict that current account deficit is negatively and significantly correlated to economic growth in the long-run and short-run. Furthermore, the Granger causality test reports the unidirectional causality running from exports to economic growth.