Surge in Economic Growth of Pakistan: A Case Study of China Pakistan Economic Corridor

Abstract

China Pakistan Economic Corridor (CPEC) is considered a massive investment that can change the economic scenario of Pakistan. The purpose of the study is to examine the contribution to the economic growth of the sectors where CPEC is investing. This research uses time-series data for 31 years to investigate the impact of macro-economic variables like foreign direct investment (FDI), human capital investment (HCI), transport investment, and information communication technology (ICT) on the economic growth of Pakistan. The results of Fully Modified Ordinary Least Square Regression Specification (FMOLS) show a positive nexus between FDI, HCI, and economic growth while economic growth and ICT show a negative relationship. The results for the impact of transportation infrastructure on economic growth are statistically insignificant. This research suggests that an increased focus on building knowledge, expertise, and skillset of human resources will help in reaping the benefits of CPEC’s investment. Future researchers can increase the period of the study to ascertain the implicit or explicit impact of CPEC on economic growth. The results also suggest that policymakers and researchers should focus on developing human capital to reap the investment benefits of CPEC.