The Role of Technology in Pakistan’s Economic Development

https://doi.org/10.5281/zenodo.17719713

Abstract

This dissertation examines how technology and macro-economic factors influenced economic growth in Pakistan in the period 1990-2023. Using classical and modern growth frameworks such as the Solow Model and endogenous growth theory, the study applies the Autoregressive Distributed Lag (ARDL) approach, supported by descriptive statistics, correlation matrices, unit root tests, bounds testing for cointegration, and the Error Correction Model (ECM). Empirical evidence demonstrates that the technological advancements have a great and a positive impact on both short- and long-term economic growth. The positive effects are also observed to be strong on capital formation, labor force participation and trade openness and inflation has negative impacts on GDP per capita. The ARDL bounds test establishes the presence of the long-term equilibrium relationship between the variables and diagnostic tests show the model stability, normality, and no heteroscedasticity and serial correlation.  The findings underscore the fact that technology has been a major factor of economic growth in Pakistan in terms of productivity, efficiency, and competitiveness. Nevertheless, technological potential is not fully realized due to structural obstacles like regulatory inefficiencies, digital divides and insufficient R&D investment. The research proposes investing more on innovation and digital infrastructure and to allow enabling policy frameworks to give impetus to sustainable economic development in Pakistan.

Keywords: Technology, Capital, labor force, trade, inflation, Economic Growth and ARDL