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The study examines two parallel hypotheses no. 1 The relationship between international trade and economic growth and no. 2 The relationship between international trade and poverty reduction in Pakistan. The objective of the first part of the study is to explore the impact of trade liberalization on economic growth with various covariates. The model contains real GDP per capita for economic growth, trade as share of GDP and the control variables such as financial development, government spending, annual inflation, remittances and manufacturing as shares of GDP are also used as determinants of economic growth for the period of 1973 2007. The second part of the study investigates the link between international trade and poverty reduction along with several independent variables. The model contains head count ratio for poverty, trade as share of GDP and the other determinants of poverty like real GDP per capita, consumer price index proxy for inflation, total investment, and agriculture as shares of GDP and urbanization as share of total population are also used.
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