Abstract

This study works on the issues of liberalization effects on growth, various theories of growth and bond among liberalization from theoretical and estimation perspectives. Estimation proposes critical examination of renowned economists, their estimation procedure and variable selection is highlighted. This study in the light of Lucas, Barro, Romer and Edwards work develop variables for analysis and used time series which have not used by the scholars especially with reference to Pakistan and its neighboring countries.  Empirical literature in 1990’s depicts the importance of the trade as major policy variable. Trade openness affects efficiency and growth increase market size, leads to technological spillover, economies of scale through research and development, higher profit to investors. Major objective of study is to explore the bond among liberalization and growth, convergence in Pakistan and its neighboring countries affects of knowledge gap (used for convergence) in selected countries , role of trade distortion and intervention in determining growth process. The variables have depicted the expected signs and most of them are significant at conventional levels. Moreover, R² in all the estimated regression is considerably high indicating that the empirical model is capable of explaining variability in growth rate of GDP per capita. Moreover, the F statistics values are also significant which shows the efficiency and correctness of model.

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