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Research Article
Received July 30, 2015; Accepted October 01, 2015; Published February 23, 2016;
Copyright: 2016 Armughana Tanveer et al. This is an open access article distributed under the Creative
Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium,
provided the original work is properly cited.
Cite This Article: Tanveer, A., Manan, N.(2016). Impact of Infrastructure on Economic Growth of Pakistan. Journal
of Economic Research, 2(1).1-12
ABSTRACT
The paper investigates the impact of infrastructure on economic growth of Pakistan using Jarque-Berra, White test and
Breusch-Godfrey techniques for the period (1974-2011). Overall the result reveal that Gross Domestic Product, Gross Fixed
Capital Formation, Per Capita Health Expenditures, Total generation of electricity (Hydel + Thermal + Nuclear),Total Road
Lengths ,Total Telephone Lines and CPI play an important role in economic growth in Pakistan. More importantly the
study finds that infrastructure development in Pakistan has significant positive contribution to growth. The experience from
Pakistan suggests that it is necessary to design an economic policy that improves the infrastructure as well as gross fixed
capital formation for sustainable economic growth in developing countries.
KEYWORDS: Gross Domestic Product, Gross Fixed Capital Formation, Per Capita Health Expenditures, Total generation
of electricity, Total Road Lengths ,Total Telephone Lines
INTRODUCTION nations who witness more and more low rates of return on
such infrastructure investments.
The variables used for empirical analysis in this study are Additional tests are also applied to check for various
as follows: dimensions of model reliability and adequacy. Jarque-Berra
test for the normality confirms error terms to be normally
DEPENDENT VARIABLES distributed. Breusch-Godfrey serial correlation LM test
confirms no serial correlation and White test indicate
i. Gross Domestic Product (GDP). homoskedasticity.
METHODOLOGY
All the variables in the model are used in log forms as log
form shows relative growth and also to run a double-log
model and check for the elasticity of GDP with respect to
all independent variables. An additional benefit of double-
log model is that it makes interpretation of results more
objective and meaningful. GFCF, TGOE and PCHE are
used as proxies for infrastructure. Through our empirical
analysis, we are going to check the impact of infrastructure
on the economic growth of Pakistan.
Lags: 2
4
LTGOE does not Granger Cause LGDP 35 1.75099 0.1909
squared
Prob(F-statistic) 0.000000
Prob(F-statistic) 0.985022
Prob(F-statistic) 0.328531
MA Backcast: 1972
9
Variable Coefficient Std. Error t-Statistic Prob.
Prob(F-statistic) 0.000000
10
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