Impact Of External Debt On Ecoomic Growth Of Pakistan

The objective of this research paper is to study the impact of external debt on economic growth of Pakistan. For this purpose, we collected data from different sources for the period 1980-2017 and selected variables include GDP as dependent variable while external debt, imports, exports, population growth rate per annum, debt services and gross capital formation as independent variables. We used analytical techniques such as ADF's unit root Test, Bound Test, ARDL Model and Error Correction Model to check stationary and short run and long run relationship between variables. Our study results show that external debt and debt services and volume of imports and population growth rate had negative impact on GDP while export, gross capital formation and employed labour force participation had positive effect on GDP during study period. We suggest that Pakistan must reduce external debt level and generate resources through tax revenue, exports, efficiency and productivity.