Abstract – AOCRJ-V2I4P2

Do Exports and Economic Growth Depend on each other at
Intergovernmental Organization Level Trade: An Empirical
Study

 Shafaqat Mehmood
UC BerkeleyX | edX, The University of California At
Berkeley, United States

Tariq Mehmood
University of the Punjab, Lahore, Pakistan

Abstract:
A number of trade opportunities exist in Pakistan by establishing close links with Organization for Economic Cooperation and Development (OECD) countries, and these opportunities could be achieved through trade openness. Furthermore, Pakistan can play significant role in enhancement of trade relations among the OECD countries because major trading partners of Pakistan falls under the umbrella of OECD. The aim of the study is to analyze Export-Led Growth (ELG) and Growth-Led Exports (GLE) hypotheses in case of Pakistan’s export to OECD (PETOECD) in presence variable namely Pakistan Total Exports (PTE). This study also analyzes relationship among Pakistan exports to OECD, PTE and Gross Domestic Product (GDP) as measure of Economic Growth of Pakistan. Data analysis software namely: SPSS-16 and E-View 7 have been used to analyze the data and time series data has been used for the period of thirty-eight year from 1975 to 2012. Unit root test used to check the stationarity of data. Secondly, Johansen’s Co-integration test employed to inquire the cointegratied equations among variables. Thirdly, Granger causality test has been employed to check the direction of causality among the variables under consideration. Results of Johansen’s Co-integration indicate existence of long run relationship among variables. Granger causality test indicated that at lag 2, there is unidirectional causal relationship between PETOECD and FDII. There is bidirectional causal relationship between PTE and PETOECD. A major portion of Pakistan exports (55%
approximately) is towards the OECD. So, the identification of GLE or GLE hypotheses in case of PETOECD may help for suitable policy prescription which will be lead to enhancement and improvement of exports relationship with OECD countries.

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