Abstract: Science Set Journal of Economics Research

Abstract:
This study investigates the impact of exports, imports, and gross fixed capital formation (GFCF) on Nepal’s eco nomic growth using the Auto-Regressive Distributed Lag (ARDL) approach. Analyzing annual data from 1975 to 2023, the study examines both short-run and long-run dynamics of these macroeconomic variables. The findings reveal that exports significantly contribute to economic growth in the long run, while imports exert a negative influence, suggesting structural trade imbalances. GFCF plays a crucial role in boosting GDP, highlighting the importance of capital investment in sustaining long-term development. The error correction model confirms that deviations from long-run equilibrium adjust at 26.58% per year. Stability and diagnostic tests validate the robust ness of the model. The report emphasizes the need for strategic trade and investment policies to increase Nepal's capacity for exports, control imports, and foster capital formation to create a more stable and sustainable economic environment.