Sectoral Growth of Pakistan: Evidence from ARDL Approach

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Muhammad Ajmair
Muhammad Akram Gilal
Abdul Rahman Nizamani

Abstract

In this research paper, we followed the general to specific approach for finding out the factors that determine sectoral growth in Pakistan. The objective was to see which of these factors have relevancy in explaining sectoral growth. Auto regressive distributed lag (ARDL) bound testing in coordination with the general to specific approach was applied for conducting the analysis. Results showed that foreign direct investment, inflation and remittances received that have relevancy in determining the services sector growth. The variables which have significant effect on agricultural sector growth are remittances received, gross national expenditures and inflation. External debt and domestic credit to private sector significantly determined industrial sector growth. Based on empirical results, it is recommended that relevant authorities should augment the factors that cause sectoral growth and control those factors that retard it.

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