Role of Political Instability in Trade Pattern and Economic Growth: A Case of Pakistan

Abstract

Economic growth is based on the foreign investments and international trade based on stable and consistent policies. Stable political and economic policies attract the foreign investments and international trade. Political instability affect the foreign investment and economic growth. The role political instability has been tested on the pattern of international trade and economic growth. The results shows that terms of trade insignificant while trade restriction indication a significant impact on economic growth. Trade patterns indicates a significant relationship with economic growth. The results indicates that political instability affect the relation of trade pattern and economic growth adversely as moderating factor. It has been observed that political instability is quite high in case of Pakistan. Since last ten years political system of Pakistan is improving after the revival of democratic system and trade with neighboring and developed countries is improving and a positive signals has been observed in economic growth of Pakistan