Abstract
Per Capita Income and productivity of industrial sector are very low in developing nations including
Pakistan as compared to developed nations. Three reasons have been mentioned in the literature for
this difference; geographical differences, role of international trade and the quality of institutions.
This study examines the short run and long run impacts of trade openness, and quality of institutions,
on the growth of industrial sector of Pakistan, using time series data over the period of 1984-2013.The
Cobb- Douglas production function has been augmented by adding quality of institutions, trade
openness, and financial development variables to probe their impacts on the industrial growth. The
most recently developed combined cointegration technique by Bayer and Hanck (2013) has been used
to check the cointegration among the variables. Long run empirical results show that trade openness,
and quality of institutions positively contributes to the growth of industrial sector. These results
suggest that better quality and well-functioning of the institutions is a pre requisites to boost the
foreign trade, and the growth of industrial sector of Pakistan.
Abdul Farooq, A.R. Chaudhary, Ahmad Nawaz. (2019) Trade Openness, Institutions and Industrial Growth in Pakistan: An Application of Bayer and Hanck Cointegration Test, Abasyn Journal of Social Sciences, Volume-12, Issue-1.
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