The Effect of Trade Liberalization on Agriculture Growth in Pakistan

Abstract

Trade liberalization plays a vital role in the growth of any economy. However, the role of trade liberalization in the growth of Pakistan is not yet investigated. The main purpose of the current study is to evaluate the effect of trade liberalization on the enhancement of agricultural development in Pakistan. The secondary data for the 45 years from 1972 to 2016 have been drawn from the World Development Indicator and Pakistan Economic survey. The unit root tests, i.e., the Augmented Dicky Fuller (ADF) and Phillips Perron (PP) tests, were used to check the stationary level of the concerned variables. The ARDL framework was used to detect the short-run and long-run relationship of the variables. The study concluded that the reality of estimation exists for the long interval, which indicates that long-run correlations are present. The study further concluded that in the short and long run, trade liberalization, the consumer price index, and the numbers of tractors have a positive and significant impact on the growth of agriculture in the Pakistan economy. The diagnosis tests of different models show that the models are correct and stable.