Do Economic, Institutional, or Political Variables Explain Economic Growth

  •  Hasnat Ahmad    
  •  Asma Arif    
  •  Syed Mofazzal Mohyuddin    


This study analyzed the impact of trade openness and institutional variables on GDP growth of Pakistan using
annual time series data for the period 1984 to 2010. This study follows the Johansen co-integration analysis and
error correction model to analyze the long run relationship among the variables. The result of Johansen
co-integration indicates that there exists a long run equilibrium relationship among the variables in the model.
There is a negative long-run relationship between real GDP and trade openness. The relationship between
government stability (GOV_ST) and real GDP is found to be positive whereas the association between real GDP
and corruption is found to be negative. The error correction term (ECT) is statistically significant at the 5% level
of significance suggests a moderate speed of convergence to equilibrium.

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