Empirical Analysis of Exports, Imports and Industrial Value Added and Their Impact on Annual Growth Rate of Pakistan
Exports of goods and services and industrial value added are considered the two pinnacle sectors in the economic growth of Pakistan. Today’s capital intensive international markets and Pakistan’s primary goods and labor intensive goods results in increase trade deficit. This study empirically analyzed the extent of impact of exports, imports and industrial value added on growth rate of Pakistan. We have found that exports and industrial value added sectors have positive contribution in the economic growth of Pakistan while imports negatively affect the growth rate. An Ordinary Least Square method is used and multi linear regression estimation is utilized. The Johnson Co-integration test shows strong long-run relationship of exports, imports and industrial value added with Gross Domestic Product of Pakistan. Analyzing the short-run, the Error Correction Model has negative and significant co-efficient. This study concluded that the industrial value added has the largest positive impact on economic growth and Pakistan should focus to make its industrial sector more competitive.
Key words: Exports and Imports of Goods and Services, Industrial Value added, Annual GDP growth rate, Sort-run and Long-run Growth, Pakistan.