Sectoral Investment and Economic Performance of Pakistan: A Time Series Analysis (1990 – 2021)

Abstract

The purpose of this study is to investigate the impact that various types of investments have had on Pakistan's overall economic performance. GDP, GDP per capita, inflation, and trade are the variables that are used to measure economic performance. For the purpose of this investigation, time series data from 1990 to 2021 has been collected, and the ADF unit root test and the ARDL technique have been utilized for analysis. The results of the ADF unit root explicate that GDP, GDP per capita, Trade, Investments in Agriculture, Manufacturing, Infrastructure, Energy, and Labor force are stationary at 1st difference and Inflation & Investment in Mining are stationary at the level. So, it is decided to apply the ARDL technique for long-run relationships. The results of ARDL long-run express that Investment in Agriculture sector, Infrastructure, Energy, Manufacturing, and Mining are a source of higher Nominal GDP and GDP per capita. The labor force has been positive for growth but negative with the price level. On the other hand, investments in agriculture and infrastructure may increase the price level of the economy but investment in energy, manufacturing, and mining may reduce the price level. The labor force also turns out to reduce price levels by enhancing output levels. For the trade model, Investments in Agriculture, Manufacturing, Infrastructure, and Energy have turned out to increase the trade of Pakistan while investment in mining and the labor force has been reducing factors for trade.