How Trade With The Organization Of Islamic Corporation Impacts Pakistan’s Economic Growth
Keywords:
OIC, ARDL, ECM, TSLS, CUSUM, CUSUMSQ, Diversification, product-wise, destination-wise, Pakistan.Abstract
This study examined the impact of Pakistan’s trade with OIC on country’s economic growth by using data from 1976 to 2023. The ADF indicated a mixed level of integration. Therefore, the study utilized the bound test to check the existence of cointegration. The ARDL outcomes indicated that exports to OIC had positive impact on economic growth of Pakistan, whereas negative influence of imports from OIC on economic growth. Results also supported inflation-led growth hypothesis. Furthermore, exchange rate and gross fixed capital formation also recorded positive impact on economic growth. Furthermore, the error correction term was found to be significant with the correct sign. The TSLS results supported the ARDL findings, indicting robustness of the results. Moreover, the CUSUM and CUSUMSQ test confirmed the stability of the model. therefore, the study recommends that government should provide incentives to import substitution industrialization that would play an important role in reducing import reliance. Additionally, Pakistan should diversify exports to OIC countries by product that would accelerate economic growth of the economy.
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