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<strong>BUITEMS</strong> Quality & Excellence in Education Exploring the Impact of Trade Liberalization on Economic Growth for Pakistan Estimation and Empirical Results Prior to estimating the Model, it is important to discuss the expected signs of coefficients of explanatory variables, the expected signs of coefficients are: The expected sign for the slope coefficient of dependent variable i.e. ln Y and L(labor), expressed as “”in the Model is positive, because GDP will increase due to increase in labor force. . So our null and alternative hypothesis will be: H 0 : 0 and H 1 : > 0 (One tailed test). We are expecting the positive sign for “”which is the slope coefficient for dependent variable i.e. ln Y and K (Capital), any positive change in the capital stock of nation will effect GDP positively. In this case we will tests following hypothesis : H 0 : 0 and H 1 : > 0 (One tailed test). The expected sign for “” is positive, the empirically many researchers have reported that the trade liberalization (OT) have positive relationship with the overall level of economic activities (GDP growth). So our hypothesis will be: H 0 : 0 and H 1 : > 0 (One tailed test). The expected sign for is positive as a positive change in foreign direct investment (FDI) will have positive influence on ln Y (GDP growth). We will evaluate following null and alternate hypothesis: H 0 : 0 and H 1 : > 0 (One tailed test). By using the estimation software (MegaStat- 2007) I have estimated the MLR model represented by equation (1). The estimated model is as follows. 76
<strong>BUITEMS</strong> Quality & Excellence in Education Exploring the Impact of Trade Liberalization on Economic Growth for Pakistan Our estimated equation is: (10.25) (5.389) (3.354) (4.036) (-4.165) The results indicate that all the estimated signs, except for FDI, are consistent with the expected signs. The relatively smaller sign of coefficients is due to the use of macroeconomic data. One justification of the negative sign of the slope coefficient of FDI could be: that for last few years the FDI in Pakistan is directed towards privatization of state owned enterprises, so FDI is not contributing effectively in the growth of GDP. The t-values mentioned in the parentheses, which are indicates that all the coefficients are statistically significant at 95 % level of significance. The overall significance of the regression can be judged through the F-value which is 267.39 (P
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