Abstract:
Background and Purpose of the study
This study is an effort to investigate the Impact of Privatization on the economic growth of
Pakistan. Being most debated topic among economists over the decades it is considered
necessary to analyze the significance of privatization of State Owned Entities (SOEs) in the
short run and the long run with special reference to the economic growth of Pakistan. The
period of the research covers post-privatization era specifically after the foundation of
Privatization Commission of Pakistan in 1991.
Methodology
The impact of privatization on economic growth of Pakistan has been analyzed by using
annual time series data for the last twenty-five years from 1991 to 2015, incorporating
Gross Domestic Products, Privatization Revenues, Gross Fixed Capital Formation and
Labor Force as the relevant variables. To find the long run effect, the Johansen System
Cointegration statistics, for nature of the effect among variables, the regression analysis by
using Ordinary Least Square (OLS), and for the causality among variables, the Granger
Causality test statistics have been used.
Findings
The analysis from the Ordinary Least Squares (OLS) and the cointegration, there found a
positive and significant effect of privatization on the economic growth of Pakistan.
Privatization has been found significant in the short run as well in the long run. A causal
effect has also been found between privatization and economic growth.
Conclusion
Results depict that privatization plays a positive and significant role in the economic growth
in the long run as well in the short run. Hence, privatization is considered a feasible option
in the context of Pakistan to facilitate the economic growth.
