Vol 5 No 1 (2019)

Impact of Government Size Threshold on Economic Growth of Pakistan (1980-2015)


Ms Hina Kanwal
MS Student, Department of Commerce, Shah Abdul Latif University, Khairpur
Ikhtiar Ali Ghumro, PhD
Professor at Institute of Commerce, Shah Abdul Latif University, Khairpur
Asad Raza Abidi, PhD
Professor Department of Economics, Shah Abdul Latif University, Khairpur
Ashiq Ali Lashari
Lecturer, Department of Economics, Shah Abdul Latif University, Khairpur

The purpose of this research study is to investigate the existence of Armey curve in case of Pakistan. OLS regression model was applied for this purpose. The observed results show that Govt Expenditure, Investment, population growth and unemployment rate positively and significantly affect Pakistan’s economic growth. Whereas, consumption and Trade openness show positive but insignificant impact on economic growth. The main objective of this research was to find out reverse U curve to explain relationship among govt expenditures and economic growth for the period of 1980 to 2015. We found that the optimal size of Pakistani government spending is 18.2 percent but the actual spending is 20.4 percent. Our result suggests that govt expenditure all the way through increase. Therefore, this research recommends the Pakistani govt to decrease its spending up to the maximum level, to achieve efficient utilization of public sector expenditures and promote economic growth.

SALU-CER Editor in Chief
Working as faculty member in institute of Commerce Shah Abdul Latif University Khairpur since 12 September 1996. At present working as Professor and Director Institute of Commerce of Shah Abdul Latif University Khairpur. Also working as founder Editor-in-Chief of SALU-Commerce & Economics Review since 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *