EXPORT-GROWTH NEXUS WHILE USING THE BLOCK EXOGENEITY: EMPIRICAL EVIDENCE FROM PAKISTAN

Abstract

The core objective of the study is to analyze the association between export and eco-nomic growth under the consideration of the time frame 1967 to 2017 for Pakistan economy. The review of literature assists to find out the frequently utilize factors are the real GDP per capita, export, import, trade openness, fiscal development and capi-tal formation possible determinants of the economic growth. However, Export Led Growth (ELG) hypothesis is oftenly employed to elaborate the affiliation between ex-port and the growth. Autoregressive distributed lag (ARDL) bound test approach to cointegration accompanied with the structural break and vector auto regressive (VAR) are employed to analysis the long-term association among real GDP per capita, ex-port, import, trade openness, fiscal development and capital formation. The empirical analysis confirms the cointegration among the factors and the ELG hypothesis holds in Pakistan economy. The Block Exogeneity reveals that export and the capital for-mation have strong influence to stimulate the economic growth. While all the other factors have cumulative influence on the growth. Moreover, the impulse response exposes that if the shock of real GDP per capita, import, trade openness, fiscal devel-opment and the capital formation are given to the export, then response of export would be positive in the coming time frame.