DETERMINANTS OF ECONOMIC GROWTH OF PAKISTAN

Abstract

This study investigates the relationship between democracy and economic growth in Pakistan, utilizing the Autoregressive Distributive Lag (ARDL) model to analyze annual time series data from 1984 to 2016. The results reveal that democracy significantly promotes long-term economic growth, with a positive coefficient of 0.466. Conversely, military intervention in politics is found to impede growth, with a negative coefficient of -0.756. Among the control variables, trade openness exhibits a positive association with GDP growth (0.399), while inflation has a substantial negative impact (-0.368). Additionally, foreign direct investment (FDI) positively influences economic growth, with a coefficient of 0.652. These findings underscore the critical role of democratic governance in fostering economic development and provide valuable insights for economies with emerging legal and political institutions to enhance their growth trajectories.