Evaluating the Importance of Imports in International Trade of Pakistan: An Empirical Analysis from ARDL Approach

Abstract

The concentrated debate exists among the policy and academic circles on the importance of goods and services especially in developing countries. In one hand, imports can promotes foreign trade in developed and developing countries, while on the other hand it can increase access to modern technologies, capital goods, other necessary goods and services. In world economies, most of the world countries and especially developing countries are dependent on the imports of goods. This study is an empirical attempt to evaluate the role and importance of imports in foreign trade of Pakistan using annual time series data for the period of 1972-2015. In methodology of the study the Unit root test, Auto-regressive Distributed Lag model, Bound testing approach for long-run relation and ARDL co-integration method were applied as analytical techniques. The results obtained from regression analysis of the variables data shows the encouraging and considerable role of imports and its determinants in foreign trade of Pakistan.