Exploring the Linkages Among Economic Growth, Openness, Income Inequality, Education and Health in Pakistan
The present study is an attempt to investigate empirical linkages among economic growth, openness, income inequality, education and health in Pakistan during 1974-2009 by using annual time series data. Phillips-Perron (PP) unit root test is utilized to check stationarity of the variables. Long-run relationship is confirmed through Johansen and Juselius cointegration test. VECM is proposed to check short-run and long-run dynamics. Toda-Yamamoto causality test is utilized for observing the causality. Diagnostic tests are utilized to confirm the validity of the model. The results support strong positive impact of openness of trade, education and health on economic growth in the long-run whereas income inequality is negatively associated with economic growth. The study finds significant five uni-directional causalities and two bi-directional causalities among variables. For achieving higher economic growth in Pakistan attention must be directed towards decisive economic policies related to liberalizing trade, provision of education and health facilities and to reduce income inequality.
JEL Classification: F43, F13, I19, I29
Key words: Economic Growth; Openness; Income Inequality; Education; Health
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