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Quality & Quantity

, Volume 45, Issue 1, pp 223–231 | Cite as

Foreign direct investment, trade openness and economic growth in pakistan and turkey: an investigation using bounds test

  • Mushtaq Ahmad KlasraEmail author
Research Note

Abstract

In the literature empirical evidences regarding export-led growth (ELG), FDI-led exports, and growth-driven exports (GDE) hypotheses have been mixed and inconclusive. This paper uses the autoregressive distributed lags (ARDL) model (Pesaran and Shin, Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, 1990) and tests the existence of long run equilibrium relationship between the determinants of growth during the period 1975–2004 for Pakistan and Turkey. The results indicate that in the short run there is bi-directional causal relationship between trade openness and exports for Pakistan and FDI and exports relationship for Turkey. The long run relationship results support the growth-driven exports hypothesis for Turkey and openness-growth nexus in Pakistan.

Keywords

Economic growth Foreign direct investment Autoregressive distributed lags model (ARDL) Causality Pakistan and Turkey 

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Copyright information

© Springer Science+Business Media B.V. 2009

Authors and Affiliations

  1. 1.Institute of Management Sciences (IMS)Bahauddin Zakariya UniversityMultanPakistan

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