Trade Globalization and Human Welfare: An Analytical Study of Pakistan

Abstract

There is widespread consensus that international trade drives economic growth. There is a bunch of literature that confirms this consensus, while economic growth is concerned with the means to human welfare which is the intended end outcome of all economic activities. Thus, this study is concerned with whether global trade directly influences human welfare. We have conducted the time series analysis by taking the data from 1990 to 2021. We measured human welfare through the Human Development Index (HDI) and Global Trade through the KOF Trade Globalization Index. We chose the ARDL strategy for cointegration based on the characteristics of the time series data, and we presented both short- and long-term results. We concluded from data analysis that global trade and human development have a long-term, positive, and significant link.  Moreover, Human development is also significantly and positively associated with population growth, public development spending, and economic growth. Hence, these findings suggest that, for Pakistan to pursue its human development goals, policymakers should adopt policies that promote free trade, complemented by measures to encourage economic growth, public development expenditure, and population.