Introduction

 The transfer of money, products, and services across nations is known as international trade.
 According to Adam Smith and David Ricardo, countries that play an active role in
international markets contribute more to productivity and growth, rather than the countries
engaged in production for the domestic market. On the one hand, export benefits the country
from various aspects by increasing the employment, providing foreign currency income,
increasing the standard of life, and consequently supporting the economic growth.
 Pakistan's export performance, has remained steady, with a 16% increase from 2003 to 2006.
So the issue is that Pakistan's commodities are exceptionally focused on couple of things in
which, cotton producing, rice, material and sports products, which account 72% offer in
absolute products during 2008.

Significance of the study:

 The objective of the study is to examine that how international trade is related with
economic growth in case of pakistan.
 To investigate the impact of international trade on GDP growth of Pakistan.
 How international trade can effect economic growth.

Literature review

Author name Year Country Dependent Independent findings

variable variable
Yıldız 2020 BRICS-T GDP Import , export export and
import had a
statistically
significant and
positive effect
on economic
growth.
Athar iqbal, 2012 Pakistan Real GDP REAL EXPORTS, The emerical
Irfan hameed TOT(terms of result from
& komal devi trade) granjer
casuality
technique
indicate
unidirectional
casuality from
GDP to exports
in Pakistan.
Adeleye & 2015 Nigeria GDP BOT(Balance of Total Export
Adeteye Trade), TIM(Total (TEX) remains
Import ),TEX positive and
(Total Export ) , significant
BOP (Balance of while others
 Payment) remain
insignificant.
Richard Nana 2017 Ghana GDP FDI, EXPT, The study
Boakye & INF,REM,EXP,CAB found out that
Edward Gyamfi export, foreign
direct
investment,
gross capital
formation,
remittance
money per
capita and
external debt
per capita have
a positive
relationship
with economic
growth.

Data and methodology:

 Times Series Data from (1991-2022), collected from different organizations such as WDI (World
Development Indicators), FAO .

 This study examined Relationship between international trade and economic growth of
Pakistan.

 Dependent Variable

GROSS DOMESTIC PRODUCT (GDP)

 Independent Variable

Imports
Exports
Inflation
1 lnGDPt = α 0 + α1 ln(IMP)t + α2 ln(EXP)t + α3 ln(INF)t + µt

Where,

Ln GDP = Gross Domestic Product

Ln IMP = Imports of goods and services

Ln EXP = Exports of goods and services

Ln INF = Inflation, Consumer price.

Augmented Dickey-Fuller Test (Unit Root Test):

TABLE

Variables Test Statistics Probability Order Of Integration

Ln GDP -5.052954 0.0003 I (1)

Ln IMP -4.828044 0.0005 I (1)

Ln EXP -5.196878 0.0002 I (1)

LN INF -5.391218 0.0010 I (0)

ARDL (Auto Regressive Distributed Lag)

Long run relationship among dependent and independent variable is analyzed through ARDL and

short run relationship is also analyzed through ECM.

ARDL BOUND TEST

ARDL bound test is used to determine either there is an impact in long run or not.

F-Statistic is 15.03

Significance Low Bound Up. Bound

10% 2.37 3.2

5% 2.79 3.67

2.5% 3.15 4.08

1% 3.65 4.66
ARDL LONG RUN RESULT
Variables Coeffi. Std. Err T-Stats Probab.

Ln IMP ** 0.265089 0.095563 2.773973 0.0101

Ln EXP** 0.150272 0.102885 1.460580 0.1561

Ln INF ** -0.084065 0.023508 -3.576031 0.0014

Short Run and ECM Regression:

Variables Coefficient Std. Error T-Statistic Probability

D(Ln IMP) 0.274180 0.101439 2.702915 0.0127

D(Ln EXP) 0.203843 0.147301 1.383852 0.1797

D(Ln INF) -0.051488 0.023737 -2.109103 0.0407

CointEq(-1) -0.332994 0.060219 -5.529690 0.0000

The finding indicates that imports has a positive impact on economic growth (GDP).

Conclution:

 This study uses time series data from 1991 to 2022 to investigate the relationship between
Pakistan's economic growth and international trade.
 . In this study import and export have positive impact on economic growth.
 Inflation have a negative but significant impact on GDP.
 If inflation increase the price of goods and services also increase, this effect cost of
production which decrease the profit of producer due to which price of these goods increase
and we produce less so exports decrease and GDP also decrease.

Policy recommendations:

 Develop infrastructure projects to improve connectivity for trade.

 Strengthen international cooperation to address trade disputes and barriers.
 Support small and medium-sized enterprises (SMEs) to participate in global trade
 Invest in trade education and training programs to enhance competitiveness.
 Promote sustainable trade practices to protect the environment.
 Establish special economic zones to attract foreign direct investment.
 Reduce tariffs to promote free trade
 Develop export promotion strategies.
 Continuously monitor and evaluate the impact of trade policies on economic growth.
 Support trade capacity building initiatives in developing countries.
 Encourage diversification of export products and market.
 Promote innovations and technological advancement.