Impact of Government Debt and Basic Needs on Economic Growth in Pakistan

Abstract

This paper examines the relationship between basic needs and economic growth and also finds the interaction between output, health, education and nutrition. The study also focuses on the impact of government debt and debt servicing on economic growth. Time series data is used from period 1970 to 2010.Augmented dickey-fuller test is used in order to check the stationarity of time series data. The ordinary least square (OLS) method and Granger Causality test are used in order to find an interrelationship between basic needs variables like health, education, nutrition and growth. The results show the significant impact of all variables except debt servicing on economic growth. Granger causality also indicates the causal relationship between all variables and growth except labor force rate.

Key words; economic growth, education, health, debt, labor force rate, nutrition.