Role of Investment in the Course of Economic Growth in Pakistan
The present research was focused to investigate the
role of investment in the course of economic growth with reference to
Pakistan. The study analyzed the role of the public and private
investment and impact of the political and macroeconomic
uncertainty on economic growth of Pakistan by using the vector
autoregressive approach (VAR). In long-run both public and private
investment showed a positive impact on economic growth but the
growth was largely driven by private investment as compared to
public investment. Government consumption expenditure, economic
uncertainty and political instability hampered the economic growth of
Pakistan. In short-run the private investment positively influences the
growth but there was negative and insignificant effect of the public
investment and government consumption expenditure on the growth.
There was a positive relationship found between economic
uncertainty (proxy for inflation) and GDP in short run.
[1] Aschauer, D. (1989), "Does Public Capital Crowd-Out Private Capital?"
Journal of Monetary Economics, Vol.24, 171-88.
[2] Aschauer, D. (1989), "Is Public Expenditure Productive?" Journal of
Monetary Economics Vol. 23, 177-200.
[3] Belloc, M., and P. Vertova (2004), "How Does Public Investment Affect
Economic Growth in HIPC? An Empirical Assessment" Working paper,
Department of Economics, University of Siena, Vol.416.
[4] Blejer, M. I. and M. S. Khan (1984), "Government Policy and Private
Investment in Developing Countries" IMF Staff Papers, 379-413.
[5] Blejer, M.I. and M. S. Khan (1984), "Private Investment in Developing
Countries" Finance and Development, 26-29.
[6] Burki, S. J. (2008), "Pakistan-s Economic Difficulties and Their
Consequences" Woodrow Wilson International Center for Scholars
2008.
[7] Caballero, R. J. (1999), "Aggregate Investment" Handbook of
Macroeconomics, Chapter 12, Vol.1, Edited by. J. B. Taylor and M.
Woodford. Elsevier Science B.V.
[8] Chrinko, R. S. (1993a), "Business Fixed Investment Spending:
Modeling Strategies, Empirical Results, and Policy Implications"
Journal of Economic Literature, Vol.31, No.4, 1875-1911.
[9] Economic and Social Survey of Asia and Pacific (2008), "United
Nations Economic and Social Commision for Asia and Pacific".
[10] Ghali, K. H. (1998), "Public Investment and Private Capital Formation
in a Vector Error-Correction Model of Growth" Applied Economics,
Vol.30, 837-844.
[11] Ghani, E and M. Din (2006), "The Impact of Public Investment on
Economic Growth in Pakistan" The Pakistan Development Review,
Vol.45, No.1, 87-98.
[12] Hussain, F. (2008), "Pakistan's economic growth may pick up to 6.5
percent next year: ADB" Business Recorder. (April 03 2008).
[13] Ibrahim, M. H. (2000), "Public and Private Capital Formation and
Economic Growth in Malaysia, 1961-1995" IIUM Journal of Economics
and Management, Vol.8, No.1, 21-40.
[14] Johansen, S. (1988), "Statistical Analysis of Cointegration Vectors"
Journal of Economic Dynamics and Control, Vol.12, 231-254.
[15] Johansen, S. and K. Juselius (1990), "Maximum Likelihood Estimation
and Inference on Co-integration with Application to the Demand for
Money" Oxford Bulletin of Economics and Statistics, Vol.52, 170-20.
[16] Khan, A. H. (1988) "Macroeconomic Policy and Private Investment in
Pakistan" The Pakistan Development Review, Vol.27, No.3, 277-292.
[17] Khan, A. H. (1997) "Foreign Direct Investment in Pakistan: Policies and
Trends" The Pakistan Development Review, Vol.36, No.4, 959-985.
[18] Khan, M. T. Y. and K. Sasaki (2001) "Roles of Public Capital in
Pakistan-s Economy: Productivity, Investment and Growth Analysis"
RURDS, Vol.13, No.2, 143-162.
[19] Looney, R.E. (1997), "Infrastructure and Private Investment in Pakistan"
Journal of Asian Economics, Vol.8, No.3, 393-420.
[20] Mallik, G. and A. Chowdhury (2001), "Inflation and Economic Growth:
Evidence from Four South Asian Countries" Asia-Pacific Development
Journal, Vol.8, No.1, 123-135.
[21] Naqvi, N.H. (2002), "Crowding-in or Crowding-out? Modelling the
Relationship between Public and Private Fixed Capital Formation Using
Co-integration Analysis: The Case of Pakistan 1964-2000" The Pakistan
Development Review, Vol.41, No.3, 255-276.
[22] Naqvi, N.H. (2003), "Is Public Capital More Productive than Private
Capital? Macroeconomic Evidence from Pakistan, 1965-2000" Working
paper, Economic and Finance, Vol.3, No. 3.
[23] Pakistan, Government of (1997), 50 Years of Pakistan in Statistics:
1947-97. Islamabad: Federal Bureau of Statistics.
[24] Pakistan, Government of Economic Survey (Various Issues). Islamabad:
Ministry of Finance.
[25] Todaro, M.P. and S.T. Smith "Development Economics". 9th Ed.
Published Addison-Wesley (E) 2005
[26] Ramirez, M.D. and N. Nazmi (2003), "Public Investment and Economic
Growth in Latin America: an Empirical Test" Review of Development
Economics, Vol.7, No.1, 115-126.
[1] Aschauer, D. (1989), "Does Public Capital Crowd-Out Private Capital?"
Journal of Monetary Economics, Vol.24, 171-88.
[2] Aschauer, D. (1989), "Is Public Expenditure Productive?" Journal of
Monetary Economics Vol. 23, 177-200.
[3] Belloc, M., and P. Vertova (2004), "How Does Public Investment Affect
Economic Growth in HIPC? An Empirical Assessment" Working paper,
Department of Economics, University of Siena, Vol.416.
[4] Blejer, M. I. and M. S. Khan (1984), "Government Policy and Private
Investment in Developing Countries" IMF Staff Papers, 379-413.
[5] Blejer, M.I. and M. S. Khan (1984), "Private Investment in Developing
Countries" Finance and Development, 26-29.
[6] Burki, S. J. (2008), "Pakistan-s Economic Difficulties and Their
Consequences" Woodrow Wilson International Center for Scholars
2008.
[7] Caballero, R. J. (1999), "Aggregate Investment" Handbook of
Macroeconomics, Chapter 12, Vol.1, Edited by. J. B. Taylor and M.
Woodford. Elsevier Science B.V.
[8] Chrinko, R. S. (1993a), "Business Fixed Investment Spending:
Modeling Strategies, Empirical Results, and Policy Implications"
Journal of Economic Literature, Vol.31, No.4, 1875-1911.
[9] Economic and Social Survey of Asia and Pacific (2008), "United
Nations Economic and Social Commision for Asia and Pacific".
[10] Ghali, K. H. (1998), "Public Investment and Private Capital Formation
in a Vector Error-Correction Model of Growth" Applied Economics,
Vol.30, 837-844.
[11] Ghani, E and M. Din (2006), "The Impact of Public Investment on
Economic Growth in Pakistan" The Pakistan Development Review,
Vol.45, No.1, 87-98.
[12] Hussain, F. (2008), "Pakistan's economic growth may pick up to 6.5
percent next year: ADB" Business Recorder. (April 03 2008).
[13] Ibrahim, M. H. (2000), "Public and Private Capital Formation and
Economic Growth in Malaysia, 1961-1995" IIUM Journal of Economics
and Management, Vol.8, No.1, 21-40.
[14] Johansen, S. (1988), "Statistical Analysis of Cointegration Vectors"
Journal of Economic Dynamics and Control, Vol.12, 231-254.
[15] Johansen, S. and K. Juselius (1990), "Maximum Likelihood Estimation
and Inference on Co-integration with Application to the Demand for
Money" Oxford Bulletin of Economics and Statistics, Vol.52, 170-20.
[16] Khan, A. H. (1988) "Macroeconomic Policy and Private Investment in
Pakistan" The Pakistan Development Review, Vol.27, No.3, 277-292.
[17] Khan, A. H. (1997) "Foreign Direct Investment in Pakistan: Policies and
Trends" The Pakistan Development Review, Vol.36, No.4, 959-985.
[18] Khan, M. T. Y. and K. Sasaki (2001) "Roles of Public Capital in
Pakistan-s Economy: Productivity, Investment and Growth Analysis"
RURDS, Vol.13, No.2, 143-162.
[19] Looney, R.E. (1997), "Infrastructure and Private Investment in Pakistan"
Journal of Asian Economics, Vol.8, No.3, 393-420.
[20] Mallik, G. and A. Chowdhury (2001), "Inflation and Economic Growth:
Evidence from Four South Asian Countries" Asia-Pacific Development
Journal, Vol.8, No.1, 123-135.
[21] Naqvi, N.H. (2002), "Crowding-in or Crowding-out? Modelling the
Relationship between Public and Private Fixed Capital Formation Using
Co-integration Analysis: The Case of Pakistan 1964-2000" The Pakistan
Development Review, Vol.41, No.3, 255-276.
[22] Naqvi, N.H. (2003), "Is Public Capital More Productive than Private
Capital? Macroeconomic Evidence from Pakistan, 1965-2000" Working
paper, Economic and Finance, Vol.3, No. 3.
[23] Pakistan, Government of (1997), 50 Years of Pakistan in Statistics:
1947-97. Islamabad: Federal Bureau of Statistics.
[24] Pakistan, Government of Economic Survey (Various Issues). Islamabad:
Ministry of Finance.
[25] Todaro, M.P. and S.T. Smith "Development Economics". 9th Ed.
Published Addison-Wesley (E) 2005
[26] Ramirez, M.D. and N. Nazmi (2003), "Public Investment and Economic
Growth in Latin America: an Empirical Test" Review of Development
Economics, Vol.7, No.1, 115-126.
@article{"International Journal of Business, Human and Social Sciences:52375", author = "Maqbool Hussain Sial and Maaida Hussain Hashmi and Sofia Anwar", title = "Role of Investment in the Course of Economic Growth in Pakistan", abstract = "The present research was focused to investigate the
role of investment in the course of economic growth with reference to
Pakistan. The study analyzed the role of the public and private
investment and impact of the political and macroeconomic
uncertainty on economic growth of Pakistan by using the vector
autoregressive approach (VAR). In long-run both public and private
investment showed a positive impact on economic growth but the
growth was largely driven by private investment as compared to
public investment. Government consumption expenditure, economic
uncertainty and political instability hampered the economic growth of
Pakistan. In short-run the private investment positively influences the
growth but there was negative and insignificant effect of the public
investment and government consumption expenditure on the growth.
There was a positive relationship found between economic
uncertainty (proxy for inflation) and GDP in short run.", keywords = "Investment, Government Consumption,Growth, Co-integration, Pakistan.", volume = "4", number = "6", pages = "754-5", }
