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Analysis of Infrastructure Investment and Institutional Quality on Living Standards: A Case Study of Pakistan (1990-2013)

Ghamz-E-Ali Siyal, Sajjad Haider Khaqan, Ahsen Mukhtiar and Atta Ur Rehman
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Ghamz-E-Ali Siyal: Student of MS Economics, S3H, NUST, Islamabad
Sajjad Haider Khaqan: Research Scholar, Pakistan Institute of Development Economics, Islamabad
Ahsen Mukhtiar: Scholar, Institute of Economics, Faculty of Business, Economics and Social Sciences CAU Kiel University, Germany
Atta Ur Rehman: Student of MS Economics, S3H, NUST, Islamabad

The Pakistan Development Review, 2016, vol. 55, issue 4, 315-329

Abstract: In this study, the relationship of Infrastructure Investment and Institutional Quality (CIM) on Living Standards of people was analysed for Pakistan. This paper comprises of trend analysis of institutional quality for different periods of governments of Pakistan coupled with an empirical analysis of the model. The empirical estimates are comprised of unit root test, Johansen Cointegration, VAR analysis and Granger Causality tests for the sample of 1984–2013. The trend analysis depicts fluctuations of Institutional Quality in different governments due to different political conditions of every period. The empirical analysis shows that there exists long standing relationship between the I nstitutional Q uality, Infrastructure Investment and living standards of people. However, the VAR analysis shows that the coefficients of only Institutional Quality and Living Standards of People (previous year i.e. lag variables) resulted significance in affecting living standards of the people. The Granger causality result shows bi-directional and uni-directional relationships among variables. The results in our study indicate bi-directional relationships of Living Standards of People (GDPC) with Institutional Quality (CIM). Secondly, CIM and Infrastructure Investment (Developmental Expenditure) are having uni-directional relationship. Thirdly, Population and Institutional Quality (Contract Intensive Money) are having uni-directional relationship. Fourthly, GDPC and Infrastructure Investment carry a uni-directional relationship.

Keywords: Institutional Quality (Contract Intensive Money (CIM); Infrastructure Investment (Developmental Expenditure); Trade Openness; GDP per Capita; and Population (search for similar items in EconPapers)
JEL-codes: E02 F41 H53 O1 O4 P23 (search for similar items in EconPapers)
Date: 2016
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