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ijcrb.webs.com<br />

JUNE 2011<br />

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 2<br />

Table 5 which reconcile model 5, confirmed the fact that there is a unidirectional causality<br />

between miscellaneous imports and gross domestic product i.e.(GDP→MIS) which suggest<br />

that increase in GDP increases the demand for miscellaneous imports, where increase in<br />

miscellaneous imports has no impact on GDP in long run.<br />

Table 5: Miscellaneous Imports<br />

lag 1 lag 2<br />

Null Hypothesis F-Statistic Probability F-Statistic Probability<br />

MIS does not Granger Cause GDP 3.51* 0.06** 2.11 0.13<br />

GDP does not Granger Cause MIS 1.35 0.25 2.48* 0.09**<br />

6. Concluding Remarks<br />

This study uses the time series data from 1970 to 2008 for Pakistan to explore the causality<br />

between imports and growth. The results strongly support a bi-directional causality from<br />

GDP to imports as far as disaggregate level of imports concern. The results suggest that at<br />

disaggregate level, there is bidirectional causality between chemicals imports, machinery<br />

imports to gross domestic product (GDP). Where neither food imports causes GDP nor GDP<br />

causes food imports.<br />

The economic importance and relevance of understanding the import growth relationship lies<br />

in the fact that import of intermediate goods is of crucial importance for economic growth.<br />

Increase of imports of intermediate goods enhance the productivity of domestic industries,<br />

through a bundle of beneficiary effects i.e. more advanced production technology, more<br />

productive raw material (chemicals for textile industry), improved organizational and<br />

managerial skills, and ultimately increases the exports of the country.<br />

The findings of this study do have some important implications for policymakers in Pakistan.<br />

As it is clear that increase in aggregate and disaggregate imports in Pakistan supplements<br />

domestic industry and exports as well as economic growth. In terms of policy<br />

recommendation we suggest that a careful policy should be adopted about the import of those<br />

goods (raw materials) which are necessary for the production in the domestic industries and<br />

which have positive impact on the economic growth.<br />

COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 1723

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