Analyzing the Economic Impact of Construction Sector in Pakistan

Abstract

This study investigates the economic impact of construction sector in Pakistan by using the data from the period 1961 to 2020. In addition to the construction industry, the impact of other industries such as the manufacturing industry, services industry, and agriculture industry on economic growth was also analyzed. The ARDL estimates point out that the variables service sector contribution in GDP, construction industry contribution in GDP, manufacturing value- added, agriculture sector contribution in GDP and GFCF directly impact the economic growth while the variable inflation negatively affects the economic growth in Pakistan although the relationship between manufacturing sector and economic growth is found to be statistically insignificant. Based on the findings of the study it is concluded that the construction sector boosts the economic growth of Pakistan so policies should be designed that encourage construction activities in an economy.