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Theoretical and Applied Economics
No. 11 / 2011 (564)

Impact of FDI and Trade Openness on Economic Growth: A Comparative Study of Pakistan and Malaysia

Zaheer Khan KAKAR
National University of Modern Languages Islamabad, Pakistan
Bashir Ahmad KHILJI
National University of Modern Languages Islamabad, Pakistan

Abstract. This paper examines the role of trade openness and foreign direct investment in relation to economic growth for Pakistan and Malaysia for the period 1980-2010. Johansen co-integration test is used to estimate the nature of relationship and Granger causality test is used to determine the direction of causality in the model.

Keywords: trade openness; foreign direct investment; economic growth; co-integration; Granger causality.

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