Exports-Led Growth Hypothesis: The Econometric Evidence From Pakistan

Furrukh Bashir, Muhammad Mujahid Iqbal, Ismat Nasim


The study aims at investigating the Export-led growth hypothesis in Pakistan by applying Unit root test, Co-integration, Vector error model and Granger causality tests. Time series data of the selected variables (Real GDP, capital, employed labor force, exports, consumer price index and terms of trade) for the period of 1972-2012 is used for analysis. The export-led growth hypothesis claims that exports positively contribute to economic growth. The results revealed that there is a strong positive long run as well as short run relationship between exports and economic growth in Pakistan. It is recommended on the basis of findings that the government should announce export bonus, export financing and export credit guarantee schemes to encourage the exports. Export processing zones should be established. These zones will not only catch the attention of foreign investors but also provide access to international markets to Pakistani exporters.


Export-led growth; Co-integration; Vector error model; Granger causality; Econometric evidence

Full Text:



Abel, A. B., & Bernanke, B. S. (2007). Macroeconomics (6th ed.). Addison Wesley, New York.

Alimi, S. R., & Muse, B. O. (2013). Export-led growth or growth-driven exports? Evidence from Nigeria. British Journal of Economics, Management & Trade, 3(2), 89-100.

Anwer, M. S., & Sampth, R. K. (1997). Exports and economic growth (pp.1-18). Presented at Western Agricultural Economic Association, Annual Meeting.

Anwer, M. S., & Sampth, R. K. (1999). Investment and economic growth (pp.1-21). Presented at Western Agricultural Economic Association, Annual Meeting.

Asteriou, D., & Hall, S. G. (2007). Applied econometrics, a modern approach using Eviews and Microfit (revised edition). Palgrave Macmillan.

Bashir, F., Nawaz, S., Khursheed, U., Khan, J., & Qureshi, N. J. (2011), Determinants of inflation in Pakistan: An econometric analysis using Johansen co-integration approach. Australian Journal of Business and Management Research, 1(5), 71-82.

Chacholiades, M. (1990). International economics ( 2nd ed.). New York: McGraw Hil.

Chemeda, F. E. (2001). The role of exports in economic growth with reference to Ethiopian country (pp.1-17). Prepared for “Annual meeting of American Agricultural Economics Association in Chicago”.

Ekanayake, E. M. (1999). Exports and economic growth in Asian developing countries: Co-integration and error correction models. Journal of Economic Development, 24(2), 43-53.

Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251-276.

Faridi, M. Z., Malik, M. S., & Bashir, F. (2011). Transportation, telecommunication and economic development in Pakistan. Interdisciplinary Journal of Research in Business, 1(7), 45-52.

Fosu, A. K., & Gyapong, A. (2010). Terms of trade growth of resources economies: A tale of two countries. For presentation at IMF Institute High Level Seminar on “National resources, finance, and development”. Confronting old and new challenges in Algiers, Algeria.

Govt. of Pakistan. (2014), Pakistan economic survey (2010-11). Federal Bureau of Statistics, Statistical Division.

Govt. of Pakistan. (2014). Pakistan economic survey (2011-2012). Federal Bureau of Statistics, Statistical Division.

Govt. of Pakistan. (2014),.Handbook of statistics on Pakistan economy 2010. State Bank of Pakistan.

Govt. of Pakistan. (2014). 50 years of Pakistan in statistics. Federal Bureau of Statistics, Statistical Division.

Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill International Editions: Economics Series.

Heckscher, E. F. (1963). Mercantilism (Vol I and II). London: Allen & Unwin

Iqbal, A., Hamed, I., & Devi, K. (2012). Relationship between exports and economic growth of Pakistan. European Journal of Social Sciences, 32(3), 453-460.

Jhingan, M. L. (2009). The economics of development and planning (38th ed., revised and enlarged ed.). Advent Books Division Incorporation.

Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on co-integration with application to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169-210.

Johansen, S. (1988). Statistical analysis of co-integration vectors. Journal of Economics Dynamics and Control, 12, 231-254.

Kalaitzi, A. S. (2013, February 13). Export and economic growth in the United Arab Emirates (pp.1-18). Submitted to RIBM Doctoral Symposium.

Khan, A. H., Malik, A., & Hasan, L. (1995). Exports and growth and causality: An application of co-integration and error-correction modelling. The Pakistan Development Review, 34(4), 1001-1012.

Khim, V., & Liew, S. (2004). Which lag length selection criteria should we employ. Economics Bulletin, 3(33), 1-9.

Li, Y., Chen, Z., & San, C. (2010). Research on the relationship between foreign trade and the GDP growth of East China-Empirical analysis based on the causality. Modern Economy, 1, 118-124.

Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3-42.

Mankiw, N.G. (2009). Macroeconomics (7th ed.). Worth Publishers.

Mishra, P. K. (2011). The dynamics of relationship between exports and economic growth in India. International Journal of Economics, Science and Applied Research, 4(2), 53-70.

Newman, W.L. (2008). Social research methods, quantitative and qualitative approaches (6th ed.). Pearson.

Newman, P. C., Gayer, A. D., & Spencer, M. H. (1954). Source readings in economic thoughts (pp.24-53). Norton, New York.

Ram, R. (1985). Exports and economic growth: Some Additional Evidence. Economic Development and Cultural Change, 33(2), 415-425.

Ram, R. (1987). Exports and economic growth in developing countries: Evidence from time series and cross sectional data. Economic Development and Cultural Change, 51-72.

Romer, P. M. (1986). Increasing return and long-run growth. The Journal of Political Economy, 49(5), 1002-1037.

Ricardo, D. (1817). The principle of political economy and taxation (3rd ed.). Batoche Books.

Stait, F. A. (2005). Are exports the engine of economic growth? An application of Co-integration and causality analysis for Egypt, 1977-2003. Economic Research Working Papers, 76, 1-18.

Shirazi, N. S., & Manap, T. A. A. (2004). Export-led growth hypothesis: Further econometric evidence from South Asia. Pakistan Development Review, 43, 563-581.

Shirazi, N. S., & Manap, T. A. A. (2005). Export-led growth hypothesis: Further econometric evidence from Pakistan. The Development Economies, XLIII (4), 472-88.

Sahni, P., & Atri, V. H. (2012). Export-led growth in India: An empirical investigation. International Journal of Marketing and Technology, 2(7), 283-298.

Salvatore, D. (2011). International economics trade and finance. John Wiley & Sons Inc; 11th International student edition editionWILEY

Sattarow, K. (2011). Inflation and Economic growth. Analyzing the threshold level of inflation (Master thesis, pp.1-29). UNIVERSITET UMEA.

Siliverstovs, B., & Herzer, D. (2005). Export-led growth hypothesis: Evidence for Chile. Ibero-America Institute for Economic Research. Discussion Paper, (112), 1-


Smith, A. (1776). The wealth of nations (Book I and IV). The Electronic Classic Series Publication.

Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70, 65-94.

The World Bank. (2009). World bank development report. World Bank Website.

Tsen, W. H. (2006). Exports, domestic demand and economic growth in China: Granger causality analysis. Review of Development Economics, 14(3), 625- 639.

Vohra, R. (2001). Exports and economic growth: Further time series evidence from less developed countries. International Advances in Economic Research, 7(3), 345-350.

Yang, M. (2001). Lag length and mean break in stationary. VAR, 1-22.

Zestos, G. K., & Tao, X. (2002). Trade and growth: Causal relations in United States and Canada. Southern Economic Journal, 68(4), 859-874.

DOI: http://dx.doi.org/10.3968/%25x


  • There are currently no refbacks.

Copyright (c)


  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

Online Submissionhttp://cscanada.org/index.php/css/submission/wizard

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.
  • We only use four mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases: caooc@hotmail.com; office@cscanada.net; ccc@cscanada.net; ccc@cscanada.org

 Articles published in Canadian Social Science are licensed under Creative Commons Attribution 4.0 (CC-BY).


Canadian Social Science Editorial Office

Address: 1020 Bouvier Street, Suite 400, Quebec City, Quebec, G2K 0K9, Canada.
Telephone: 1-514-558 6138 
Website: Http://www.cscanada.net; Http://www.cscanada.org 
E-mail:caooc@hotmail.com; office@cscanada.net

Copyright © Canadian Academy of Oriental and Occidental Culture