The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan

Syed Shujaat Ahmed and Asif Javed
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Syed Shujaat Ahmed: Pakistan Institute of Development Economics, Sustainable Development Policy Institute, Islamabad, Pakistan.
Asif Javed: Sustainable Development Policy Institute and MPhil Scholar, Pakistan Institute of Development Economics.
Authors registered in the RePEc Author Service: Shujaat Ahmed and Shujaat Ahmed Syed

Journal of Economics and Political Economy, 2017, vol. 4, issue 2, 203-214

Abstract: It is an established fact that there is strong association between investment and economic growth of a country but no such direct consensus had been developed on the type of investment. i.e. what are the different sectors in which investment has led to long term impact and did contributed to the growth. The current study in this regard will focus on investigating the relationship of Public Sector Development Programme (PSDP), Foreign Direct Investment (FDI) and Private Investment with the growth. The study will use data from 1980-81 to 2015-16 in this regard and employ Johansen cointegration to investigate the long run relationship. It is found that with foreign direct investment, health expenditure and transport and communication expenditure has negative relationship in the long run. Where as private investment, education expenditure and expenditure on housing has positive relationship with growth. Based on these findings recommendations were totally investment centric with primary focus on reduction in taxes and other barriers to bring in more investment in long run. Beside taxation, recommendations were made on administrative balance both in tax system and public sectors which were made part of provincial domain after 18th amendment.

Keywords: Public sector development programme; Foreign direct investment; Private investment. (search for similar items in EconPapers)
JEL-codes: D92 H51 H52 O40 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan (2017)
Working Paper: The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ksp:journ1:v:4:y:2017:i:2:p:203-214

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