Economic Infrastructure and Long Run Economic Growth in Pakistan: A New Insight

Abstract

The role of economic infrastructure in economic growth and development is given substantial importance in theoretical and empirical literature. In this study, economic infrastructure is disaggregated into transport, communication and power to study its effect on long run economic growth over the period 1971-2014 using Autoregressive Distributed Lag (ARDL) method. In this study we examine the impact of each component of economic infrastructure on long run economic growth and then analyze the impact of sub-indices of transportation and energy, and composite economic infrastructure index on GDP per capita. Results suggest that high roads have negative impact on per capita GDP due to over investment in high roads. However private investment,  energy consumption and electricity consumption positively and significantly impact per capita GDP. Generally transport index, energy index and composite economic infrastructure index has positive effect on GDP per capita.

Keywords: Growth, Infrastructure development, Public Capital

JEL Classification: E22, H54, H4, O1