Abstract
US aid is perceived as an important factor in the economic
growth of Pakistan. Owing to the United States (US) for aid,
Pakistan stood along the US on various occasions, where
certain decisions have brought a wave of terrorism into
Pakistan. Therefore, it is important to assess the impact of both
of these factors i.e. US aid and terrorism. Moreover, the
political landscape of Pakistan is also seen as a major factor in
fostering the growth. Therefore, the impact of US aid,
terrorism, and political stability on the long run economic
growth of Pakistan is measured using time series data from
1966-2014 in this study. ARDL co-integration technique is
employed to estimate the long run impact, whereas, Error
Correction Model exhibits the short run effect. Results are
contrary to common notions and growth is not driven by the
selected factors. All the three variables are statistically
insignificant in the long run, despite appearing with the
expected signs for growth. In the light of this study, the
policymakers can shift their alignment tendencies from aiddriven priorities to the region-based priorities like the ChinaPakistan Economic Corridor (CPEC).
Iftikhar Ahmad, Hasan Waqas Khan, Syed Abdul Majid. (2018) Impact of US Aid, Terrorism, and Political Stability on Economic Growth of Pakistan, Paradigms , Vol 12, Issue 1.
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