"escalating the global competitiveness of domestic industries (Kandil and Mirazaie, 2005). Dornbusch(1988) shows that the efficacy ofdepreciation in improving the balance of payments depends onredirecting demand in the right direction and by the correct amount and also on the capacity of thedomestic economy to meet the additional demand through increased supply. Bird (2001) argues that ifinflation is on acceleration, then there is no course of action to keep the real exchange rate in equilibrium.Therefore, in his outlook, several developing countries have selected flexible exchange rates because ofthis reason but this is not an idyllic elucidation since demand and supply elasticities may be fairly low:even when they satisfy the Marshall-Lerner conditions, their response to exchange rate changes may notbe as big as in developed economies. The research so far done on the developing countires are included in this paper and discussed here. Byreviewing these studies no definite conclusion can be drawn for developing countries. Eita, Joel Hinaunye(2013) finds evidence in favour of Marshall-Lerner condition for Namibia using a cointegration model andalso estimates income elasticities of trade for the country. When the SAARC countries are taken intoconsideration namely India and China, 2 studies were conducted which concluded that Marshall-Lerner isfulfilled they are Ritesh Pandey(2012) for India and Yun Zheng(2012)for China. Judith Olivia Canipe(2012) conducted a study in Ghana to test the ML condtion prior to 1983 using OLS and panel regressionsand the theory was not agreed upon. Basak Gümüstekin(2012) attempted to enquire the existence of theeffect of devaluation on the trade balance both for the long run as well as the short run for a period of 22. years which included 20 industries using the co integration and error correction modeling The result doesnot strongly favor the ML condition. The main loophole noticed here is that only specific industries havebeen studied by them which does not bring out a clear and broad picture. Theoritical model and conceptAdnan Ali Shahzad (2013) tried to estimate the relationship between the real exchange rate and thebalance of trade for the selected South Asian countries. The study used panel unit root test and Pedronicointegration test. The study found no evidence for the satisfaction of the condition. In order to test theML condition in Nigeria Unit root tests (ADF and PP), Johansen an Juselius approach to estimation ofmultivariate cointegration system and ordinary least square (OLS) were used. The results show theevidence to support the theory.ML condition was tested for the Kenyan economy for the period 1996 to2011 by using the quarterly data on the log of real exchange rates. in particular, fractional integration andcointegration methods were used by Robert Mudida (2012). The study concluded of a well definedrelationship and agreed with the ML condition n for the long run.A study was conducted in Pakistan with time series quarterly data for 12 major trading partners Aftab andKhan (2008). It used unit root test and ARDL model. It stated no evidence in support of the theory.W.S.Ho* (2004) estimated the import demand function for Macau by both aggregate and disaggregatemodels. Here, Johansen – Juselius co integration was used and it was concluded that disaggregate model ismore appropriate to explain the import demand.Bahmani-Oskooee (1985) used quarterly data and Almonlag structure for 7 years to estimate the ML condition in 4 developing countries. The result satisfied the J- curve and ML condition but it is criticized on the point that it did not check the data for the stationarityand therefore the result may be biased. Dornbusch and Krugman (1976) argued that there would be a perverse negative response of the tradebalance to currency depreciation, followed by a larger export elasticity that would improve the balance inthe long run. The phenomenon of the domination of the volume effect over the price effect in the long run is the Marshall-Lerner condition. If plotted over time, the trade response graph yields a J-resembling line,thus the J-curve terminology.3. RESEARCH METHODOLOGY In order to analyze the Marshall-Lerner condition, five variables are taken in this study namely;Exports, Imports, Gross National Income (GNI), Exchange Rate and the World Income (GNI of107 countries). The annual data for these variables are collected from the World Bank databasein order to maintain the consistency of source. A model consisting of the two equations havebeen formed namely export equation and the import equations in order to estimate the export andthe import elasticity. However, prior to that ,all these data have been converted to Log in order totest the Stationarity and the Cointegration and to get the most accurate results as it observed inthe previous papers that many economists have not tested the series for the cointegration andstationarity and this is very import in order to analyze the model because of these are notsatisfied then this might lead to unreliable results. Hence, in this study, the series are tested forthem. Therefore, a three step analysis is done to reach at the final conclusion.The first step is to test for the Stationarity of the series using Unit Root Test by applying SASsoftware. Afterwards, the series are tested for Cointegration using Augmented dickey-fuller test by applying SAS software and finally the model is run for the Ordinary Least SquareTechnique to find out the slope coefficients which are further used to find out the export andimport demand elasticity. log X = B1 + B2log WI +B3log ER +a1------------------to calculate Export Elasticity------(1) log Y = B1 +B2log DI + B3log ER +a2-------------------to calculate Import Elasticity------(2) Where,"