Can Economic Globalization Cure Unemployment in Pakistan? An Empirical Investigation
DOI:
https://doi.org/10.47067/ramss.v6i2.300Keywords:
Unemployment, FDI, Trade, Co-integration, PakistanAbstract
In the current economic climate of boosted economic globalization culture that results in an ease in the movement of resources from one corner of the globe to the other, unemployment is still a bitter reality. Using annual data for Pakistan from 1986 to 2020, an attempt was made in this study to empirically evaluate the long-run and short-run link between the unemployment rate and FDI, economic growth, and trade. Using the multivariate co-integration technique, the data were examined. The long-term link between the unemployment rate and explanatory variables was validated by Johansen's co-integration method. The data series' stationarity was verified using the Augmented Dickey-Fuller unit root test (ADF test), which demonstrates that all of the relevant variables are first-difference stationary. Results suggested a contradiction between the unemployment rate and foreign direct investment. Also, extensive studies found a conflict between economic expansion and the unemployment rate. While there is a long-term positive correlation between trade and the unemployment rate. Using the Impulse Response Function, short-run relationships are evaluated.
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