AN EXPLORATORY STUDY ON DETERMINANTS OF GOVERNMENT INVESTMENT IN PAKISTAN

Ahsan ABBAS*, Ghulam MUSTIFA** and Eatzaz AHMAD***

The study attempts to explore the determinants of government investment (public investment, including general government investment) in Pakistan using the autoregressive distributed lags (ARDL) estimation technique over the period 1964 to 2015. Both theoretical and empirical content available in the literature is employed to develop an econometric model to analyse the government investment behaviour in the case of a developing country like Pakistan. The findings of empirical estimation indicate that budget deficit, output growth and foreign capital inflow boost government investment while domestic borrowing, military regimes and inflation discourage government/public sector’s investment activity.

Keywords: Government Investment, Public Investment, General Government Investment, Investment Behavior, ARDL, Pakistan.