Comparative Analysis Of Economic Performance Of Different Political Systems/Regimes Of Pakistan From 1976 To 2018

Pakistan alternated between military and civilian governments throughout 1976–2018, and growth averaged about two percentage points higher under military rule. Yet no earlier time-series study of Pakistan has treated the political regime itself as a determinant of growth. This paper models gross domestic product as a function of the budget deficit and public debt (as shares of GDP), inflation, foreign direct investment (FDI), the interest rate, the real exchange rate, unemployment and two regime dummies, using annual World Bank and IMF data for 1976–2018. Unit-root tests show a mix of I(0) and I(1) series, so the autoregressive distributed lag (ARDL) bounds-testing approach is applied. The bounds F-statistic (2.738) supports cointegration at the 10% level, and the error-correction term (−0.461) confirms a stable long-run relationship. In the long run, output rises with inflation and falls with the interest rate, the real exchange rate and unemployment; the deficit, debt and FDI are insignificant. In the short run, the deficit has a positive immediate and a negative lagged effect. Both regime dummies are positive, significant and nearly equal (civilian 4.747; military 4.729). Regime type therefore matters only in the short run and does not separate the two systems; long-run performance is driven by macroeconomic fundamentals.