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Empirical analysis of relationship between investment, good governance and GDP growth rate in Pakistan (1996-2016)

Author

Listed:
  • Erum KHUSHNOOD Zahid SHAIKH
  • Naveed Ahmed SHAIKH
  • Imtiaz PIRZADA

    (Pakistan Institute of Development Economics)

Abstract

Progress and prosperity of the nations, directly or indirectly depend on economic growth of the country. High and stable GDP growth rate indicate economic strength of the nation, which depend on various economic and non-economic factors. Investment (i.e. both private and public) provides significant contribution to the economic growth and development in a country. On the other hand, non-economic factors also play an important role in developing productive environment and enhancing productive capacity of the economy. Pakistan is a developing country and its weak and unstable economy demands high and stable GDP growth rate while it is subsisting on low and unstable GDP growth rate. Therefore, it is required to explore major economic and non-economic factors that hinder the GDP growth rate in Pakistan. In order to find out empirical impact of economic and non-economic factors on GDP growth rate in Pakistan, ARDL approach was applied on time series data during the period of 1996 to 2016. Empirical results confirmed the existence of log run relationship between dependent and independent variables. In addition, the speed of adjustment was not found to be very high (i.e. -0.35362). On the basis of study results, therefore, it is suggested that there is a need of economic reforms and implementation of effective policies that can make economy of Pakistan strong and stable, which in turn enable the country’s economy to grow faster and to compete in international market.

Suggested Citation

  • Erum KHUSHNOOD Zahid SHAIKH & Naveed Ahmed SHAIKH & Imtiaz PIRZADA, 2018. "Empirical analysis of relationship between investment, good governance and GDP growth rate in Pakistan (1996-2016)," Journal of Economics Library, EconSciences Journals, vol. 5(3), pages 211-220, September.
    • Handle: RePEc:cvv:journ5:v:5:y:2018:i:3:p:211-220
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    References listed on IDEAS

    as
    1. Naveed Ahmed SHAIKH & Perveen SHAH & Najaf SHAH, 2015. "Empirical Estimation of GDP determinants, Household Consumption Expenditure and the Consumption Multiplier in Pakistan (1985-2011)," Journal of Economics and Political Economy, EconSciences Journals, vol. 2(2), pages 317-330, June.
    2. Kulsoom Rani & Zakia Batool, 2016. "Impact of Political Instability and Foreign Direct Investment on Economic Development in Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(2), pages 83-89.
    3. Uwe Hassler & Jürgen Wolters, 2006. "Autoregressive distributed lag models and cointegration," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 90(1), pages 59-74, March.
    4. Kulsoom Rani & Zakia Batool, 2016. "Impact of Political Instability and Foreign Direct Investment on Economic Development in Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(2), pages 83-89, February.
    5. Naveed Ahmed SHAIKH & Perveen SHAH & Najaf SHAH, 2015. "Empirical Estimation of GDP determinants, Household Consumption Expenditure and the Consumption Multiplier in Pakistan (1985-2011)," Journal of Economics and Political Economy, KSP Journals, vol. 2(2), pages 317-330, June.
    6. Khan, Mohsin S & Kumar, Manmohan S, 1997. "Public and Private Investment and the Growth Process in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(1), pages 69-88, February.
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    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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