Impact of Population Growth Rate, Inflation Rate and Public Education Expenditure on the GDP Growth Rate of Pakistan

Abstract

This study is about the impact of Population growth rate, Public Expenditure on Education and Inflation have on the Economic Growth of Pakistan. The Research is conducted to study the Macro-economic factors effecting for the economic growth economy of Pakistan This is quantitative study and the data was taken from the period 1995-2020 i.e. 25 years. The data was taken from World Bank Database. Dependent variable in study was GDP Growth rate and independent variables were Population growth rate, Public Expenditure on Education and Inflation rate. Different tests like Simple regression analysis, Descriptive statistics, LM Test for auto correlation and correlation matrix were implemented that helped us study the impact of independent variables on the dependent variable. The simple Regression of the linear Regression model revealed that 51.7% (R-square) of the variability observed in the independent variable is explained by the regression model. Population growth rate is inversely Proportional to GDP Growth Rate. Public Education expenditure is significant at the level of significance of 5% and is Directly Proportional to GDP Growth Rate. Inflation rate is inversely Proportional to GDP Growth Rate. The major finding of this study is that The Empirical Research and Results Have Revealed that with the increase in Population Growth rate and Inflation rate, the response variable of our model GDP Growth Rate falls while with increase in Public expenditure on Education (as a percentage of GDP) the GDP Growth Rate increases. Thus to attain sustainable Economic Growth we need curtail Rapid Population Growth and Inflation Rate. Along with the need to expand our Public expenditure on Education (as a percentage of GDP) as it is observed to help increase the GDP Growth Rate. These results are helpful for policy makers, Government, to make effective economic policies for growth of economy of Pakistan.