Does Trade Cause Growth? An Empirical Evidence from Pakistan

The purpose of this theoretical and empirical analysis is to re-investigate the relationship between trade and its consequent impact upon growth in a developing country like Pakistan.The variables in this study are used to understand the trends in the growth of economy of Pakistan.The results and interpretation of the analysis has been done, keeping in view the socio-political situations and their impact on the growth. The variables used in the study are exports,foreign direct investment(FDI) and a measure of trade openness while their impact upon the gross domestic product of economy has been analysed.The statistical technique used in the research is Auto-Regressive Distributed Lag approach.This technique would essentially help to understand the relationship between proxy variable of growth i.e. GDP and other variables of study without impact of lag difference at same level.In sum, the analytical framework would help establish the linkage between the variables representing trade like export,FDI and trade openness upon the growth of economy.