PAKISTAN’S MACROECONOMIC DETERMINANTS OF ECONOMIC GROWTH

Abstract

Unsustainable economic growth (EG) has been attributed to a number of factors, including inflation, a widening fiscal deficit, rising foreign debt, low levels of human and physical capital, bad environment, political instability, and deteriorating law and order conditions in Pakistan. Economists began charting the relationships among foreign aid and EG in developing countries approximately 40 years ago. The aim of this study was to examining how some of major macroeconomic factors affect Pakistan's EG. To isolate the influence of important macroeconomic determinants on growth from 1980-2020, a multiple regression methodology is employed. Primary education is a crucial prerequisite for accelerated growth, according to quantitative data. In a similar vein, expanding the physical capital stock would support growth. The findings also imply that Pakistan's economy's openness fosters economic expansion. On the other hand, both output growth factors have a negative relationship with the budget deficit. expansion and external debt have a negative relationship, indicating that the best way to finance expansion is to rely on domestic resources. The findings highlight how crucial prudent, long-term growth-oriented policies are to achieving sustainable growth.