Growth Mechanisms: Dissecting the Economic Determinants of Pakistan's GDP
DOI:
https://doi.org/10.56532/mjbem.v4i1.66Keywords:
Trade-Openness, Capital, Inflation, Human Capital, GDPAbstract
This study employs ARDL's short- and long-run estimation methodologies to examine the elements that have contributed to Pakistan's economic growth between the years 1991 and 2023. According to the data, the export-to-GDP ratio and consumer price index (CPI) had minimal detrimental impacts on GDP. However, at a significance level of 5%, we observed that an increase of one unit in both the total labor force (TLF) and gross fixed capital formation (GFCF) resulted in a near-term GDP increase of 0.695 units and a long-term GDP gain of 0.733 units. These findings indicate substantial and positive impacts on GDP. Despite its favorable nature, the life expectancy rate (LER) did not have any noticeable effect on GDP in the short or medium term. These findings emphasize the importance of increasing both capital expenditure and the workforce's size in driving Pakistan's economic expansion. In order to sustain and accelerate economic growth, the paper proposes a reassessment of trade and inflation policies, with a greater focus on policies that promote workforce growth and capital accumulation, as well as enhancing the overall quality of human capital.
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