The Relationship among International Trade, Financial Development and Economic Growth: The Case of Pakistan

Abstract

This study is conducted to investigate the relationship among international trade, financial development and economic growth in Pakistan. The ADF and PP tests are used to check the order of integration of the variables and Johansen co-integration methodology is employed to investigate the long run relationship among these variables. The direction of causality between variable is tested by Granger causality test. It is found that all of the variables are non-stationary and the analysis confirm for a long run relationship among international trade, financial development and economic growth. The results indicate that international trade and financial development spur economic growth in Pakistan. (C) 2015 The Authors. Published by Elsevier B.V.