Does Trade Openness has Noteworthy effect on Bilateral Trade Flows of E.C.O. Countries; an Empirical Investigation

Abstract This study empirically investigated the effect of trade liberalization on the bilateral trade flows of 2ECO (Pakistan, Turkey and Iran) countries using annual time series data for the period of 1980-2016. The study applied unit root test, bound testing approach and ARDL regression analysis technique to empirically examine the role and impact of trade openness on bilateral trade flows of ECO countries. The empirical results found long-run positive and significant effect of trade openness on bilateral trade flows of ECO countries. Further, the study concluded that trade openness playing an important role in exports as well as in fulfilling the requirements by imports. The findings of the study might provide significant guidelines to policy makers to initiate rules and regulations for the improvement in international trade that might help in attainment of sustainable foreign exchange reserves and economic growth of ECO countries.