Abstract:
The export sector is seen as a growth driver for the economy since it generates foreign
exchange, boosts productivity, and creates job possibilities. Pakistan has therefore
implemented a number of trade liberalization policies to boost exports and take advantage
of possible benefits. The current study aims to investigate the immediate and long-term
effects of exports on job growth in Pakistan. Additionally, it empirically examines how
Pakistan's unemployment rate is affected by foreign direct investment, gross fixed capital
formation, and labour force participation. The analysis makes use of yearly data from the
World Development Indicators and Worldwide Governance Indicators for the years 1987
through 2020. I used the Autoregressive Distributed Lag (ARDL) model approach based
on the stationary level to check the long-run relationship between the variables. The
bound test verifies the selected variables' long-term co-integration. According to the
findings of the ARDL test, rising exports have a tendency to lower unemployment rates.
Additionally, the effects of FDI and the labour force participation rate show the same
outcomes. The link between gross capital formation and unemployment is likewise found
to be negative, indicating that as capital formation rises, so will the rate of
unemployment. Additionally, the current analysis discovered a high positive correlation
between the level of regulation and the unemployment rate, which suggests that labour
market rules will raise unemployment. Additionally, the interaction term had a negative
correlation with the unemployment rate, demonstrating that in the case of an increase in
exports of high-quality regulatory goods the level of unemployment in Pakistan will
decline as a result. The study's findings indicate that raising the standard of regulations
may improve exports. It also implies that the issue of unemployment can be resolved with
better labour market policies. The government should therefore create those policies that
encourage exporting.
