Effect Of Urbanization On Wealth Accumulation In Pakistan

Abstract

Urbanization is an important determinant of wealth accumulation and a defining feature of contemporary economic development. In Pakistan, nature and magnitude of the relationship between urbanization and wealth accumulation need to explore. This study aims to examine the impact of urbanization on wealth accumulation in Pakistan. The study uses annual time series data for 48 years (1970–2017). Advanced econometric techniques are employed, including the Augmented Dickey–Fuller unit root test, the Autoregressive Distributed Lag (ARDL) model to analyze short-run and long-run dynamics, and the Breusch-Godfrey and Breusch-Pagan [1]tests for diagnostic checks. The empirical results indicate that urbanization significantly contributes to wealth accumulation in Pakistan, despite ongoing economic challenges. In the short run, real interest rate, gross domestic income, life expectancy, and gross national expenditures positively influence wealth accumulation, whereas some variables exhibit inverse long-run relationships. These findings highlight the economic implications of urbanization for Pakistan and underscore the importance of urban-focused policies to enhance wealth generation. While Pakistan’s experience differs from advanced economies, urbanization still exerts a substantial influence on wealth accumulation due to the country’s evolving economic landscape.