Abstract
Purpose- This empirical study facet at Pakistan for the period between 1960 and 2017 in the connection between public investment, public capital stock, private investment, private capital stock, and real GDP. Design/Methodology- Using theoretical and empirical literature assessment, to measure the impact of private investment, private capital stock, government investment, and government capital stock on Pakistan's real gross domestic product, we involved the ARDL Bound tests. Findings- A positive and significant connection was revealed between government investment, a private capital stock with real GDP. Private investment showed a substantial but negative impact in the short run, despite capital stocks indicating a positive and insignificant relationship with Pakistan's RGDP. The long-term consequences showed that the government's capital stocks, public investment, private capital stocks, and RGDP from Pakistan are linked positively and significantly. Private investment, however, has shown harmful and detrimental or insignificant relations with Pakistan's RGDP. Practical Implications- Our study may benefit the Pakistani economy, particularly while useful for academics and researchers to understand the basic concept of 'capital-growth' philosophy.
Highlights
The economy of Pakistan is inadequate for long periods to enable faster and high economic growth rates
A linear transition will lead to the unrestricted error correction model (UECM) from the ARDL boundary test
Based on empirical consequences, when we increase by 1% in government capital stock, government investments, and private capital stock, Pakistan's real GDP will grow by 62.18%, 7.6%, and 101.51%, respectively
Summary
The economy of Pakistan is inadequate for long periods to enable faster and high economic growth rates. The economy is experiencing a payment balance problem every few years, though continuing to expand rapidly. This is different from several influential peer countries that evolve for an extended timeframe at higher rates. This inability to sustain growth had been encouraged for Pakistan's aspirations to convert into such a middleincome economy. This short-term rise is expected to continue as it is influenced not by increasing consumption spending but by private and public investment Demand in this country grows much more quickly than its availability of products and services, leading to a need for more unsustainable imports. This means insufficient housing, lack of access to enough water and electricity, low quality of schools and hospitals
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