Pakistan’s Infrastructure Capital-Growth Analysis
Keywords:Capital growth, Pakistan, Infrastructure, government investment
Purpose- This empirical study facet at Pakistan for the period between 1960 and 2017 in the connection between public investment, public capital stock, private investment, private capital stock, and real GDP.
Design/Methodology- Using theoretical and empirical literature assessment, to measure the impact of private investment, private capital stock, government investment, and government capital stock on Pakistan's real gross domestic product, we involved the ARDL Bound tests.
Findings- A positive and significant connection was revealed between government investment, a private capital stock with real GDP. Private investment showed a substantial but negative impact in the short run, despite capital stocks indicating a positive and insignificant relationship with Pakistan's RGDP. The long-term consequences showed that the government's capital stocks, public investment, private capital stocks, and RGDP from Pakistan are linked positively and significantly. Private investment, however, has shown harmful and detrimental or insignificant relations with Pakistan's RGDP.
Practical Implications- Our study may benefit the Pakistani economy, particularly while useful for academics and researchers to understand the basic concept of 'capital-growth' philosophy.
Arslanalp, S., Borhorst, F., Gupta, S., & Sze, E. (2010). Public Capital and Growth. International Monetary Fund: Fiscal Affairs Department, Working Paper, 1–35.
Aschauer, D. A. (1990). Why is infrastructure important? Federal Reserve Bank of Boston, 21–68.
Baldwin, J. R., & Dixon, J. (2008). Infrastructure Capital: What is it? Where is it? How much of it is there? Canadian Productivity Review. No 16. Ottawa: Statistics Canada.
Calderon, C., & Serven, L. (2008). Infrastructure and Economic Development in Sub Saharan Africa. The World Bank: Washington, DC, USA, Policy Research Working Paper 4712.
Commission on Growth and Development. (2008). The Growth Report: Strategies for Sustained Growth and Inclusive Development.
Easterly, William, & Levine, R. (2001). It’s Not Factor Accumulation: Stylized Facts and Growth Models. World Bank Economic Review, 15, 177–219.
Esfahani, H. S., & Ramirez, M. T. (2003). Institutions, Infrastructure and Economic Growth. J. Dev. Econ., 70, 443–477.
Fourie, J. (2006). Economic Infrastructure: A Review of Definitions, Theory and Empirics. South African Journal of Economics - Wiley Online Library. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1813-6982.2006.00086.x
Haan, J., Romp, W., & Sturum, J. E. (2007). Public Capital and Economic Growth. World Bank, Preliminary Paper.
Heller, P. S. (2005). Understanding Fiscal Space. IMF Policy Discussion Papers (May 4, 2005).
IMF. (2005b). Public Investment and Fiscal Policy—Lessons from the Pilot Country Studies. International Monetary Fund.
IMF. (2004). Public Investment and Fiscal Policy. IMF. , 2004, Public http://www.imf.org/external/np/fad/2004/pifp/eng/pifp.pdf
Javid, M. (2019). Public and Private Infrastructure Investment and Economic Growth in Pakistan: An Aggregate and Disaggregate Analysis. Sustainability, 11(12), 3359. https://doi.org/10.3390/su11123359
Mas, M., Maudos, J., Perez, F., & Uriel, E. (1996). Infrastructures and Productivity in the Spanish Regions. Reg. Stud., 30, 641–649.
Menegaki, A. N. (2019). The ARDL method in the energy-growth nexus field; best implementation strategies. Economies.
Mohmand, Y. T., Wang, A., & Saeed, A. (2017). The impact of transportation infrastructure on economic growth: Empirical evidence from Pakistan. Lett. Int. J. Transp. Res., 9(2), 63–69.
OECD. (2011). Public Finance and Economics—General government investment. Government at a Glance 2011 - OECD.
Palei, T. (2015). Assessing The Impact of Infrastructure on Economic Growth and Global Competitiveness. Procedia Economics and Finance, 23, 168–175.
Paul, S. (2003). Effects of Public Infrastructure on Cost Structure and Productivity in the Private Sector. Econ. Rec., 79, 446–461.
Pereira, A. M., & Andraz, J. M. (2013). On the Economic Effects of Public Infrastructure Investment: A Survey of the International Evidence. Department of Economics, College of William and Mary: Williamsburg, VA, USA, Working Paper 108.
Perotti, & Roberto. (2005). Estimating the Effects of Fiscal Policy in OECD Countries. CEPR Discussion Paper No. 4842 (London: Centre for Economic Policy Research).
Pesaran, Hashem, M., Yongcheol, S., & Richard, J. S. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289–326.
Phillips, P. C. B., & Perron, P. (1988). Testing for Unit Roots in Time Series Regression. Biometrika, 75, 3335–3346.
Prud’homme, R. (2005). Infrastructure and Development. Lessons of Experience. Proceedings of the 2004 Annual Bank. Conference on Development Economics, 153–181.
Queyranne, M., Daal, W., & Funke, K. (2019). Public-Private Partnerships in the Caribbean Region: Reaping the Benefits while Managing Fiscal Risks. IMF Policy Paper. https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2019/05/08/Public-Private-Partnerships-in-the-Caribbean-Region-Reaping-the-Benefits-while-Managing-46239
Ragnar, N. (1961). Problems of Capital Formation in Underdeveloped Countries. Oxford University Press. https://www.abebooks.com/book-search/title/problems-of-capital-formation-in-underdeveloped-countries/author/nurkse-ragnar/
Rehman, F. U., Khan, M. A., Khan, M. A., Pervaiz, K., & Liaqat, I. (2020). The causal, linear and nonlinear nexus between sectoral FDI and infrastructure in Pakistan: Using a new global infrastructure index. Res. Int. Bus. Finance, 52.
Roy, R., Heuty, A., & Letouze, E. (2006). Fiscal Space for Public Investment: Towards a Human Development Approach. Paper Prepared or the G-24 Technical Meeting, Singapore, 13–14.
Sahoo, P., & Dash, R. K. (2009). Infrastructure development and economic growth in India. J. Asia Pacific Econ., 14(4), 351–365.
Sahoo, P., & Dash, R. K. (2012). Economic growth in South Asia: Role of infrastructure. J. Int. Trade Econ. Dev., 21(2), 217–252.
Santiago, R., Koengkan, M., Fuinhas, J. A., & Marques, A. C. (2020). The relationship between public capital stock, private capital stock and economic growth in the Latin American and Caribbean countries. International Review of Economics, 67(3), 293–317. https://doi.org/10.1007/s12232-019-00340-x
Tatam, J. A. (1993). The Spurious Effect of Public Capital Formation on Private Sector Productivity. Policy Studies Journal, 21.
Waheed, M., & Ghumman, A. A. (2019). Improving Pakistan’s public and private investment [World Bank]. Https://Blogs.Worldbank.Org/Endpovertyinsouthasia/Improving-Pakistan-s-Public-and-Private-Investment. https://blogs.worldbank.org/endpovertyinsouthasia/improving-pakistan-s-public-and-private-investment
World Bank. (2007). Fiscal Policy for Growth and Development Further Analysis and Lessons from Country Studies. World Bank.
Zand, & Mark. (2008). Financial Shock. Pearson Education, INC., New Jersey.
Zergawu, Y. Z., Walle, Y. M., & Giménez-Gómez, J.-M. (2020). The joint impact of infrastructure and institutions on economic growth. Journal of Institutional Economics, 1–22. https://doi.org/doi:10.1017/S1744137420000016
How to Cite
Copyright (c) 2020 Muhammad Ahmad Mazher, Prof. Dr. Jauhari Dahalan
This work is licensed under a Creative Commons Attribution 4.0 International License.