The nexus between economic growth, corruption and external debt in Pakistan

Abstract

Corruption hurts various factors of a country, including welfare systems, governments and, most importantly, economic growth. This paper investigates the relationship between economic growth and corruption in Pakistan from 1998 to 2021. We used time series models to check this relationship. The prerequisite of the time series model is the unit root test. We use the augmented dicky fuller (ADF) and Philips-Perron (PP) tests. To check the short-run and long-run relationship between economic growth and corruption, along with other macroeconomic variables, ARDL was used. As per our findings, the effects of crime and interest rates on economic growth (LGDP) are positive and statistically significant. However, the short-run association between LED and LGCF with LGDP is not statistically significant. Furthermore, corruption and gross capital formation truly influence economic growth over the long-term for this specific data, yet LED, and LIR factors are statistically insignificant, suggesting that these variables do not have a long-run relationship with economic growth. According to the results of the Short-run model, immorality and interest payment influence on income progress (LGDP) are statistically significant at a significance level of 95% and 90%, respectively.