An Inquiry into the Significance of Selected Institutions in the Economic Development of Pakistan

Abstract

Purpose: The study explores the significance of selected institutions in the economic development of Pakistan through its comparative study with Bangladesh and India over the period 2002-2021. The purpose is to identify the ultimate source of economic growth in Pakistan.
 Design/Methodology/Approach: To accomplish the objectives, the study resorts to descriptive statistics, correlation matrices and Autoregressive Distributed Lag (ARDL) modeling techniques.
 Findings: The study confirms the dominant role of institutional quality in economic growth. Comparing the role of domestic institutions to traditional growth factors the study finds out that institutional indicators such as political stability, rule of law, and government effectiveness cast a higher impact on economic growth in Pakistan than traditional factors like human capital, physical capital and trade openness. The study reveals that Pakistan faces challenges on the institutional front impeding its economic progress compared to Bangladesh and India.
 Implications/Originality/Value: The study may serve as a guiding tool for policymakers and stakeholders emphasizing an urgent call for reforms in domestic institutions and suggesting improvement in institutional quality in Pakistan to foster a favorable environment for sustainable economic growth.