Impact of Oil Prices on Economic Development of Pakistan

Abstract

This study has emphasized on assessing the relationship between change in oil prices and economic development in Pakistan. This study has considered oil prices as the independent variable. Whereas, inflation, per capita income and GDP growth rate have been considered as the dependent variables in this study. Meanwhile, the major emphasis in this study has been on assessing the relationship between oil prices (independent variable) and inflation, per capita income and GDP growth rate (dependent variables) in Pakistan. Secondary sources of data (official websites of World Bank, Ministry of Oil and Petroleum, and Stock Exchange of Pakistan) have been used for data collection regarding variables of this study from the period of 2000 – 2019 (20 years). A sample size of 20 observations has been finalized to represent the entire population. Collected data has then been analyzed through statistical instruments such as correlation and regression by using Strata. Based on the findings, it has been concluded that increase in oil prices increase inflation in Pakistan. Whereas, increase in oil prices decreases per capita income and GDP growth in Pakistan. Conclusively, it has been proved that change in oil prices brings a definite change in economic development within Pakistan.