Impact of Physical Infrastructure on Economic Growth: Implications for Public Policy

This paper intends to explore the impact of public physical infrastructure on economic growth of Pakistan in the long-run with its implications for public policy. This has been done by taking into account three public physical infrastructure indicators like telecommunication, transportation and energy. These indicators are combined through Principle Component Method (PCM). These indicators are selected not only because of their importance for economy but also because they require huge and irreversible investment which is not usually initiated by the private sector. An empirical analysis is conducted on time series annual data from 1972 to 2014 for the economy of Pakistan. By employing PCM, we have constructed infrastructure index for growth analysis. The long-run relationship is constituted by employing Johansen’s co-integration technique. The impact of infrastructure index on GDP growth is positive and statistically significant. The results suggest that public physical infrastructure provision certainly improves the economic conditions by contributing towards growth in the long-run. This paper also identifies some guide lines for public policy to ensure efficient public sector investment for the sufficient provision of physical infrastructure. Transparency and financial autonomy should be insured for the selection of public investment in infrastructure projects. This paper also proposes the public policy reforms for infrastructure expenditures to promote inclusive growth

Co-Integration Between Fertility and Human Development Indicators: Evidence from Pakistan

The main focus of this paper is to investigate the long run co-integration and short run dynamics between fertility decline and development indicators in Pakistan. Bound Testing approach (ARDL) and VECM are applied on annual time series data from 1971-2010 after finding mixed order of integration of the series through Ng -Perron unit root test. The results show that long run co-integration and short run dynamics exist between total fertility rate and Human Development Indicators (secondary school enrollment, life expectancy at birth and GDP per capita). Secondary school enrollment and life expectancy at birth prove the negative and significant impact on fertility, while GDP per capita indicated the positive but insignificant impact on fertility. The findings of study suggest that more resources should be invested in human capital formation through the provision of better education and health facilities to keep the fertility on declining

Co-Integration Between Fertility and Human Development Indicators: Evidence from Pakistan

The main focus of this paper is to investigate the long run co-integration and short run dynamics between fertility decline and development indicators in Pakistan. Bound Testing approach (ARDL) and VECM are applied on annual time series data from 1971-2010 after finding mixed order of integration of the series through Ng -Perron unit root test. The results show that long run co-integration and short run dynamics exist between total fertility rate and Human Development Indicators (secondary school enrollment, life expectancy at birth and GDP per capita). Secondary school enrollment and life expectancy at birth prove the negative and significant impact on fertility, while GDP per capita indicated the positive but insignificant impact on fertility. The findings of study suggest that more resources should be invested in human capital formation through the provision of better education and health facilities to keep the fertility on declining

Enigma of Public Assistance to Private Investment through Infrastructure: Evidence from Pakistan

Purpose: Public physical infrastructure development has fairly largeimpacts on private sector investment decisions and through this; it can affecteconomic performance (growth). The current study intends to explore thecourse in which public infrastructure affects private sector investment inPakistan and whether there exist long run equilibrium between them or not.Time series annual data from 1972 to 2015 has been employed. Instead ofusing a single infrastructure indicator, the study has constructed amultidimensional composite index through principal component analysis(PCA). Real gross fixed capital formation is used as the proxy of privatesector investment. The long run relationship is determined by Johansen’sco-integration technique after checking for the order of integration. Theempirical evidence shows that physical infrastructure availability ispositively and significantly affecting private sector investment decisions. Inaddition, credit to private sector, per capita GDP, work force and inflationrate are positively and significantly affecting private investment. Further,private investment is sensitive to public physical infrastructure availabilitynot only in long run but also in short run. A statistically significant andnegative ECT (-1) term confirms the long run relationship and convergencetowards equilibrium in case of Pakistan. Findings of the study show thatpublic physical infrastructure services endorse the private investment bothin the long run and the short run