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Institutional Change and Economic Growth in Pakistan

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  • Younis, Fizza

Abstract

This study attempts to isolate causes of institutional change and investigates the role it plays in achieving economic development. Institutional change is vital for sustainable economic growth but literature shows that related empirical evidence is limited. In this paper Multiple Indicators and Multiple Causes Model is employed. The results reveal that in case of Pakistan control of corruption, rule of law, privatization, liberalization, and voice accountability are the most important causes of institutional change. In addition to this export orientation also have a positive effect on institutional change whereas macroeconomic instability has a negative impact. Furthermore, there exists a significant positive relation between institutional change and economic development in Pakistan. The first section of the study provides an introduction, and section two provides relevant literature review. In section three methodology employed by the study is discussed. Section four presents results and discussion. Section five chalks out policy implications and concludes the study.

Suggested Citation

  • Younis, Fizza, 2015. "Institutional Change and Economic Growth in Pakistan," MPRA Paper 72938, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72938
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    References listed on IDEAS

    as
    1. Omar Azfar, 2006. "The New Institutional Economics Approach to Economic Development: A Discussion of Social, Political, Legal, and Economic Institutions," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 965-980.
    2. Chang, Ha-Joon, 2011. "Institutions and economic development: theory, policy and history," Journal of Institutional Economics, Cambridge University Press, vol. 7(4), pages 473-498, December.
    3. Joachim Ahrens & Philipp Mengeringhaus, 2006. "Institutional Change and Economic Transition: Market-Enhancing Governance, Chinese-Style," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 3(1), pages 75-102, June.
    4. A. R. Kemal, 2003. "Institutional Change, Growth, and Poverty Levels in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 299-311.
    5. M. Idrees Khawaja & Sajawal Khan, 2009. "Reforming Institutions: Where to Begin?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(3), pages 241-267.
    6. Cao, Shixiong, 2012. "Why China's approach to institutional change has begun to succeed," Economic Modelling, Elsevier, vol. 29(3), pages 679-683.
    7. Muhammad Zakaria & Bashir Ahmed Fida, 2009. "Democratic Institutions and Variability of Economic Growth in Pakistan: Some Evidence from the Time-series Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(3), pages 269-289.
    8. Chang, Ha-Joon, 2011. "Reply to the comments on ‘Institutions and Economic Development: Theory, Policy and History’," Journal of Institutional Economics, Cambridge University Press, vol. 7(4), pages 595-613, December.
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    Keywords

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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