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Quality & Quantity

, Volume 48, Issue 4, pp 2097–2119 | Cite as

Does economic liberalization promote economic growth in Pakistan? An empirical analysis

  • Qazi Muhammad Adnan Hye
  • Wee-Yeap Lau
  • Marie-Aimée Tourres
Article

Abstract

The study aims to examine the short and long term impacts of economic liberalization on economic growth in case of Pakistan from 1971 to 2011. Economic liberalization consists of reforms in both trade liberalization and financial liberalization. This study contributes to the existing literature by constructing an economic liberalization index using principal component analysis. Our results show, firstly, that economic liberalization reforms have a positive impact on economic growth in the short run. However, trade liberalization is negatively associated with economic growth in the long-run. Secondly, the estimated coefficients through rolling window show that impact of economic liberalization on real GDP is unstable during the selected period of sample. This study recommends to policy makers to enhance human capital by having more expenditure on education sector. In addition, financial reforms by way of a sectoral credit allocation should be introduced to further promote the economic growth.

Keywords

Economic liberalization Economic growth Trade liberalization  Financial liberalization Pakistan 

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • Qazi Muhammad Adnan Hye
    • 1
  • Wee-Yeap Lau
    • 2
  • Marie-Aimée Tourres
    • 3
  1. 1.Department of Economics, Faculty of Economics and AdministrationUniversity of MalayaKuala LumpurMalaysia
  2. 2.Department of Applied Statistics, Faculty of Economics and AdministrationUniversity of MalayaKuala LumpurMalaysia
  3. 3.Department of Development Studies, Faculty of Economics and AdministrationUniversity of MalayaKuala LumpurMalaysia

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