Causality between transportation infrastructure and economic development in Pakistan: An ARDL analysis

This paper examines the relationship between transport infrastructure and economic development in Pakistan. An autoregressive distributive lag (ARDL) and vector error correction model (VECM) is applied over the period 1971-2017. The results indicate that there is a long-run and causal relationship between transport infrastructure and economic development. Transport infrastructure has long-run positive impact on economic development. Furthermore, Granger causality test shows a unidirectional causality in long-run running from transport infrastructure to economic development. Interestingly, the impact of air infrastructure on economic development is statistically insignificant in long-run and short-run. The new results from this research provides a comprehensive picture of determinants of economic development from transport infrastructure in Pakistan and these new findings not only help policy makers but also can help to advance the current literature. Therefore, it is suggested that the government of Pakistan should concentrate more to increase the transport infrastructure for higher economic development.