Impact Of Foreign Debt And Governance On Economic Growth In Pakistan A Case Study On The Macro Economic Variables

Abstract

This paper examined the impact of external debt and governance on the economic growth in the Pakistan using some macroeconomic variable like foreign debt, Savings, investment, Trade deficit, Current account Balance, inflation including the governance variables like Control of corruption, Voice and accountability, Political stability and violence absence/Terrorism, Govt: Effectiveness, Regulatory Quality, Rule of Law. In this study [1]data used from 1994-2021 and the data source is world bank. For the stationary check study uses the Breakpoint ADF test and variables are mix in the order of integration, so the researcher applied the ARDL test for the estimation Governance in areas related to GDP management (e.g., public investment efficiency, fiscal policies) has a strongly positive effect on long-term growth. While governance in areas like inflation and investment showed mixed results, focusing on these areas could still help improve overall economic performance. Variables such as capital account balance, savings, and trade deficits were found to be insignificant, likely due to measurement issues or offsetting effects. Policymakers should re-evaluate these factors and consider restructured policies to align better with growth objectives.