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Macroeconomic Determinants of Economic Growth in Pakistan

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  • Zafar Iqbal

    (Pakistan Institute of Development Economics, Islamabad.)

  • Ghulam Mustafa Zahid

    (Pakistan Institute of Development Economics, Islamabad.)

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    Abstract

    The main purpose of this paper has been to examine the effects of some of the key macroeconomic variables on Pakistan’s economic growth. Multiple regression framework is used to separate out the effects of key macroeconomic factors on growth over the period 1959-60 to 1996-97. The quantitative evidence shows that primary education to be an important prerequisite for accelerating growth. Similarly, increasing the stock of physical capital would help to contribute to growth. The empirical results also suggest that openness of Pakistan’s economy promotes economic growth. Alternatively, the budget deficit is negatively related to both output growth variables. The external debt is also negatively related to growth, suggesting that relying on domestic resources is the best alternative to finance growth. However, the results presented in this study reinforce the importance of sensible long-run growth-oriented policies to obtain sustainable growth.

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    Bibliographic Info

    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 37 (1998)
    Issue (Month): 2 ()
    Pages: 125-148

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    Handle: RePEc:pid:journl:v:37:y:1998:i:2:p:125-148

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    References

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    Cited by:
    1. Musleh-Ud Din & Ejaz Ghani & Omer Siddique, 2003. "Openness and Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 795-807.
    2. Zafar Iqbal & Rizwana Siddiqui, 1998. "The Impact of Structural Adjustment on Income Distribution in Pakistan A SAM-based Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 377-397.
    3. Matthew McCartney, 2011. "Pakistan, Growth, Dependency, and Crisis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 71-94, September.
    4. Ramzan, Muhammad & Ahmad, Eatzaz, 2014. "External debt growth nexus: Role of macroeconomic polices," Economic Modelling, Elsevier, vol. 38(C), pages 204-210.
    5. International Monetary Fund, 2005. "Pakistan's Macroeconomic Adjustment and Resumption of Growth, 1999-2004," IMF Working Papers 05/139, International Monetary Fund.
    6. Jalil, Abdul & Idrees, Muhammad, 2013. "Modeling the impact of education on the economic growth: Evidence from aggregated and disaggregated time series data of Pakistan," Economic Modelling, Elsevier, vol. 31(C), pages 383-388.

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