(IDOSI Publications, 2013) Akeela Maryam; Muhammad Shahid Hassan
This study is an attempt to examine the impact of human capital; exchange rate and gross national income on trade openness in Pakistan for the period from 1976 – 2011. The findings of the study conclude that economic growth in the form of per capita gross national income has positive and significant impact on trade openness in both short run and long run in Pakistan indicating that growth led trade hypothesis works in Pakistan in the both periods. Moreover; it has also found that human capital in the form of per capita education expenditures have significant and positive impact on trade openness indicating that human capital in the form
of per capita education expenditures led trade hypothesis also works in Pakistan in both periods. Afterwards; the study has found that exchange rate has significant but negative impact on trade openness in both short run and long run in the both models in Pakistan. Finally; the estimates of CUSUM and CUSUM square have exposed that there does not exist any structural instability over time in the both models of the study.