The Impact of Decentralized Economic Affairs Expenditures on Economic Growth: A Time Series Analysis of Pakistan

Abstract

The study has examined the impact of decentralized public spending on economic growth in Pakistan from 1972 to 2012. For examining the stationarity of variables, Augmented Dickey-Fuller (ADF) unit root test is used. Autoregressive Distributed Lag Approach (ARDL) is used for cointegration among the variables of the model. The estimated results of the study show that decentralized economic affair expenditures have negative and significant impact on economic growth in Pakistan over the selected time period. The results of the study show that decentralization of economic affairs expenditures is harmful for economic growth. On the basis of empirical results, this study proposes that decentralization of economic affair expenditures is growth retarding in case of Pakistan, so Pakistan must try to manage centralized economic affair expenditures for favorable economic growth.