Fiscal Development Scenario: Evidence from SAARC Countries.

Abstract

This study has focused mainly on investigating the relationship between fiscal development and economic growth in SAARC countries. This study has considered government spending, gross fixed capital formation, real interest rate, labor force, and physical capital (representing fiscal development) as independent variables. Economic growth is considered as the dependent variable. This study has finalized 8 SAARC countries (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) to testify the relationship between variables mentioned above. Secondary source (official website of state bank of Pakistan and theGlobalEconomy.com) is used for data collection regarding study variables from the period of 2002 – 2021 (20 years). A sample of 160 observations is finalized to represent the SAARC countries. Collected data is then analyzed through statistical instruments such as correlation and regression by using Strata software. Based on the findings, it is concluded that government spending, gross fixed capital formation, real interest rate, labor force, and physical capital has significant impact on economic growth in SAARC countries. Findings of this study have proved that change in fiscal development brings a definite change in economic growth in SAARC countries.