Economic Growth In A Globalized World: The Case Of Pakistan Revisited

Abstract

The article aims to highlight whether globalization, especially for a developing country like Pakistan, has a positive correlation with economic growth. By looking at the history, we can see both the positive and negative effects of globalization on underdeveloped countries. Expansion of trade and global investment has propelled growth and moved several low-income countries to middle-income status, but at the same time, many groups in these countries have left behind. In this modern era, for a developing country to be able to compete with the developed nations, it has to adopt various globalization paths to ensure the prosperity of its economy.[1] In case of Pakistan, we can see the evidence of mentoring the economic direction of the country, there has been an increase in growth in terms of per capita income and education but the country has lacked the sight of development in terms of trade due to the unprecedented rising imports and declining exports in the country. The data set has been extracted from the World Bank Indicators and the economic survey for Pakistan from 1985-2015. It is a time series study on the country level. Vector error correlation model (VECM) confirms that globalization has a significant long-term correlation with economic growth in Pakistan. The model is also consistent with the Economic Theory.