The Importance Of Trade Liberalization In Pakistan

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CHAPTER 1

Introduction

1.1 Background Of Study:

Trade is the engine of economic growth and development, the trade liberalization or international trade the important part of a growth and gain more profit. Trade of the countries is the main source of improvement in the process of industrialization and moreover advancement of modern technologies it brings the development experience in trade structure on the basis of enough comparative advantage Hultman (1967). An empirical analysis by Adenikinju and Olefin (2000) showed that international trade and policies can improve the industrial sector and their growth also improves the domestic market and domestic industrial sector. The international trade improves the modern technology
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The liberal free trade boosts economic growth, welfare and reduces poverty the main outcome are growth, productivity, investment and price stability it also increase the employment opportunities and advancement of domestic markets (Ben-David 1996).
Importance of trade liberalization in economic development it is essential to understand transmission channels through analyzed which free trade effect industrial production, domestic private industrial investment, exports imports, and hence economic growth of Pakistan ( Alia Khan (1995), Iqbal and Zahid (1998), Din (2003)
Pakistan also emphasized in inward outward trade policies from nearly four decades. High tariff rates, non-tariff barriers, exchange control and other administrative control are the main feature of this policy. Objectives of these policies are to support import substitution industrialization and to protect infant and domestic industries from external competition. This policy has generated anti-export bias, inefficiencies and promoted rent-seeking attitudes (Qayyum Khan
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Therefore the effect of trade collapses because the import prices faster increasing than exports. The assumptions that other thing being the same is lead to fall the balance of payment at given growth rate. This has two main implications: The first implication is declining the terms of trade for the supreme commodities relative to manufactures, and secondly the terms of trade for developing countries relatively developed ones. Otherwise being despite dissimilar, they are considerably related to each
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