International trade is considered as a accelerator of economic development and growing in any state. Increase in exports helps in growing in factors of production which affects the demand for inputs. The force per unit area ensuing from increased demand of inputs stimulates the technological alteration and creates avenues for investing. This growing in exports is contagious and stipulates the growing in other sectors of the economy.Export public presentation is an indispensable tool of occupation creative activity, beef uping of balance of payment place, accelerated economic growing and sweetening in degree of income and life criterions of the citizen of any state. Emery ( 1967 ) through empirical observation proved that higher rates of exports growing lead to higher economic growing
States indulge in import from other states having to the ground that states are non self sufficient in production of all the goods and trade goods. In order to run into the domestic demands and demands and feed the industry to stir its growing aims states import natural stuff for industry, engineering, agricultural and consumer goods from the states which are efficient in production of the said points. Exports and imports together play an built-in function in finding the trade balance of a state. In this regard the kineticss of relationship between these variables hold important importance and pull the research workers for proving the nature of relationship between exports and imports ( Mukhtar & A ; Rasheed, 2010 ) .
In the country of international trade, the long-term equilibrium relationship between imports and exports has received some attending ; see, for illustration, Fountas and Wu ( 1999 ) , Granger ( 1986 ) , Gould and Ruffin ( 1996 ) , and Husted ( 1992 ) among others. The old enquiries have yielded conflicting empirical grounds about the relationship between imports and exports ( Arize, 2002 ) .
Husted ( 1992 ) had conducted a survey on exports and imports of USA and their relationship utilizing quarterly informations for the period of 1967-1989, have shown that there is a long-term relationship between imports and exports and that the mark on the estimated cointegrating coefficient is positive. Put otherwise, it is an indicant that the USA ‘s imports and exports have been brought into a long-term equilibrium through the combined effects of all macroeconomic policies on the trade balance.
Arize ( 2002 ) had studied the grounds of long-term convergence between imports and exports in 50 states from Asia, Middle East, Africa, Europe, Pacific USA and Canada, Latin America and Caribbean. The grounds he found in favour of cointegration in 35 states of the sample. The findings had indicated that macroeconomic policies of the studied 35 states out of 50 have been effectual in the long tally and these states are non in misdemeanor of their international budget restraint.
Kumar and Seema ( 2004 ) had investigated the long tally relationship between exports and imports for two Pacific Island states – Fiji and Papua New Guinea utilizing bound proving attack to cointegration and found that imports and exports for the two states show a long term relationship ( cointegrated ) . Bahmani-Oskooee ( 1994 ) had tested the effectivity of macroeconomic policies by look intoing the long-term convergence between Australian imports and exports. The application of cointegration technique revealed that Australian imports and exports are cointegrated with cointegrating coefficient really near to integrity bespeaking that so Australia ‘s macroeconomic policies have been effectual in the long-run.
Herzer and Felictas ( 2005 ) had examined the long-term relationship between Chilean exports and imports utilizing the information from 1975-2004. The consequences of the survey had indicated the being of a long tally equilibrium between exports and imports in Chile.Irandoust and Ericsson ( 2004 ) studied behaviour of trade flows in France, Germany, Italy, Sweden, UK and USA by using cointegration and clip series techniques, consequences of the survey indicated that trade flows are cointegrated for Germany, Sweden and USA connoting that trade policies have been effectual in bring imports and exports into an equilibrium.
Tang ( 2006 ) studied relationship between exports and imports for OIC member states. The consequences of the survey indicated cointegration ( long term equilibrium relationship ) for 9 of the 27 selected OIC member states ( Banglasesh, Cameroon, Chad, Guyana, Indonesia, Mali, Morocco, Niger and Senegal ) .Rhee and Oskooee ( 1997 ) had investigated the Korean imports and exports relationship utilizing quarterly informations from 1963 – 1991 and found that Korea ‘s imports and exports are cointegrated.
Rahman ( 2011 ) had studied the long-term relationship between export and import of two Southeast Asiatic states, Indonesia and Malaysia covering informations of over 45 old ages from each state including pre and post-financial crisis period in Asia. The survey concluded that cointegration was found between import and export of Malaysia but for Indonesia such relationship could non be found.
Tiwari ( 2011 ) had analyzed the nature of the long-term relationship between exports and imports for theChinese and Indian economic system from the period January -1992 to February-2010. It employed recenttime series econometric methods like unit root trial in the presence of endogenous structuralbreaks and seasonal accommodations and cointegration techniques that allow for structural interruptions andseasonal accommodations for the analysis. Cointegration analysis based on Gregory-Hansencointegration trial reveals that exports and imports of India are cointegrated while that of China isnot.
Konya and Singh ( 2008 ) through empirical observation examined the effectivity of India ‘s macroeconomic policies in accomplishing equilibrium between exports and imports utilizing logarithms of Indian exports and imports between 1949-50 and 2004-05. The consequences indicated absence of cointegration relationship between export and import informations connoting that uneffective macroeconomic policies to convey exports and imports into long-term equilibrium.
Celik ( 2011 ) had tested the long tally relationship between exports and imports of Turkey for the period of 1990-2010 utilizing monthly informations. Harmonizing to the consequences of the Engle Granger cointegration trial at that place exists a long term relationship between export and import in Turkey the mentioned period.
Keong, Choo and Yusop ( 2004 ) had investigated the long tally relationship between Malayan exports and imports by using multivariate cointegration techniques. Survey showed that the short-term fluctuations between exports and imports are notsustainable since in the long tally ; exports and imports will finally meet towards anequilibrium province.
Alias and Cheong ( 2000 ) had examined the long-term relationship between Malayan sum imports and the constituents of concluding demand outgo and comparative monetary values utilizing Johansen multivariate cointegration analysis utilizing one-year informations for the period of 1970 to 1998.
Jalil ( 2008 ) through empirical observation tested Bangladeshi import and export informations from twelvemonth 1967 to 2006 for the being of long-term relationship by using econometric techniques. The empirical consequences of the survey showed no cointegration relationship between the two parametric quantities.
Woahid ( 2012 ) had applied Johansen-Juselius cointegration attack to analyze the cogent evidence of long-term relationship among the variables of bilateral export and import between Bangladesh and its six trading spouses viz. USA, UK, Germany, India, Hong Kong and Japan and found them cointegrating.
Dumitriu, Stefanescu and Nistor ( 2009 ) analyzed the cointegration and causality between Rumanian exports and imports utilizing monthly figures from January 2005 to March 2009. The consequences of Johansen Trace Test, Engle-Granger Test and Breitung Test proved no cointegration relation between exports and imports. Granger Casuality trial applied on the information at integrating degree I ( 1 ) showed a bidirectional causality between exports and imports of Romania.
Jain and Sami ( 2011 ) had examined the grounds of sustainability of trade instability utilizing co-integration analysis utilizing clip series informations from Singapore from 1976 – 2009. Consequences of the survey concluded that Singaporean exports and imports are cointegrated.
Khadaroo and Ramlall ( 2012 ) explored sustainability of current history shortage in Mauritius by utilizing quarterly informations over the period of 1999Q1 – 2011Q3, by using cointegration and mistake rectification mold. Econometric trial proved that entire exports, and entire imports of Mauritius do non meet in the long-run.
Bineau ( 2007 ) tested Bulgarian exports in imports over the period of 1967 -2004. The empirical analysis provided grounds of long-term relationship between exports and imports ; connoting that current history shortage of Bulgaria is non sustainable.
Jashim Uddin ( 2009 ) found the being of cointegration between Bangladesh ‘s exports and imports over the period of 1972-73 to 2007-08. The consequences of the survey corroborated that Bangladesh is non in misdemeanor of its international budget restraints which is in congruent with consequences of Irondoust and Ericsson ( 2004 )
In instance of Pakistan, some of the recent surveies that have shown a important equilibrium relationship between exports and imports include Kemal and Qadir ( 2005 ) , Naqvi and Kimio ( 2005 ) and Bader ( 2006 ) .
Kemal and Qadir ( 2005 ) utilizing monthly informations from December 1981 to January 2003 concluded that there exists a long-term relationship between exports and imports of Pakistan.
Naqvi and Kimio ( 2005 ) studied quarterly informations trade informations covering a period of 1972:1 to 2004:4 and employed cointegration. The consequences proved that coefficient is close to integrity, connoting that one unit of export is tantamount to one unit of imports and therefore ensuing in a long tally convergence of the trade informations connoting that Pakistan is non in misdemeanor of its international budget restraint.
Bader ( 2006 ) studied one-year informations from 1973 to 2005 and got grounds of cointegration between exports and imports of Pakistan.
Mukhtar and Rasheed ( 2010 ) had through empirical observation examined the long tally relationship between exports and imports for Pakistan utilizing quarterly informations for the period 1972-2006. The findings confirm the stableness of the long tally equilibrium relationship between exports and imports. The survey besides proved bidirectional causality between exports and import informations.