Abstract
The objective of the study is to investigate the impact of political risk on economic growth of Pakistan and its inconsistency for the last 23 years using time series data. The variables Gross Domestic Product, Political Stability, Inflation, Interest Rate, Voice and Accountability have been used as political instability proxies. Time series analysis has been used to check the dependency of political risk on economic growth. The results show that the overall model has been significant with political risk. Economic growth and political risk have deep and strong relationship as when changes occur in political stability, it affects the economic growth of Pakistan. Political systems of developed and developing countries have change dramatically due to certain reasons in which the main factor is the economic growth. Political issues are responsible for bad economic growth. The overall result implies countries whose economic growth is stable they will not face political risk as compare to the counties whose economic growth is bad.
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