Do imports and foreign capital inflows lead economic growth? Cointegration and causality analysis in Pakistan

Rahman, Mohammad Mafizur and Shahbaz, Muhammad (2013) Do imports and foreign capital inflows lead economic growth? Cointegration and causality analysis in Pakistan. South Asia Economic Journal , 14 (1). pp. 59-81. ISSN 1391-5614

Abstract

The article investigates the impacts of imports and foreign capital inflows on economic growth of Pakistan over the period 1990 to 2010. We have applied the structural break autoregressive distributed lag (ARDL) bounds testing approach to cointegration to examine the long-run relationship between the variables. The vector error correction model (VECM) Granger causality multivariate framework is used to investigate the causal relationship between the series. Empirical analysis in this article confirms the long-run relationship between foreign capital inflows, imports and economic growth. The results indicate that foreign capital inflows and imports have positive and significant effect on economic growth in case of Pakistan. Causality analysis reveals the bidirectional causality between the variables, but strong causal relation is running from foreign capital inflows and imports to economic growth.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Published version made not accessible
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 19 May 2013 23:53
Last Modified: 11 Jul 2014 05:22
Uncontrolled Keywords: imports; FDI; growth; Pakistan
Fields of Research : 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1402 Applied Economics > 140212 Macroeconomics (incl. Monetary and Fiscal Theory)
14 Economics > 1403 Econometrics > 140302 Econometric and Statistical Methods
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910103 Economic Growth
Identification Number or DOI: 10.1177/1391561413477941
URI: http://eprints.usq.edu.au/id/eprint/23511

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