Impact of External Debt on Economic Growth of Pakistan: Solow Growth Model Approach

Abstract

This study aims to analyze the Impact of External Debt on Economic Growth of Pakistan using Solow Growth Model Approach. For this purpose, the timeseries data has been utilized over the period from 1976 to 2021 for Pakistan. Gross Domestic Product have been used as dependent variable, Debt Service, External Debt, Exports, Imports, Gross Capital Formation and Population Growth as independent variables. Ordinary Least Square method investigated the study existence of statistically significant relationship between Gross Domestic Product and Debt Service, External Debt, Exports, Imports, Gross Capital Formation and Population Growth. The results of the OLS analysed that the Debt Service, External Debt, Exports, Import and Gross Capital Formation are contacted and to discuss that they have recommended significantly correlated with dependent variable GDP. The study provides specific evidence to policymakers that increased External Debt on Economic Growth contributes to increased countries economic growth