The Power of Human Capital and Political Stability: Unlocking Pakistan’s Economic Potential

Abstract

Indeed, investing in human capital and ensuring political stability are critical for unlocking Pakistan's economic development. They boost economic progress, attract investments, and create opportunities by leveraging the country's youth and innovation potential. Overall, these factors ensure sustainable development and resilience against global issues. Therefore, the current study investigates the impact of human capital, the polity index, and government expenditure on Pakistan's economic growth. To evaluate it empirically, the researcher utilized the time series data ranging from 1985 to 2023 on human capital, labor force participation, foreign direct investment (FDI), Polity index, Government expenditure, and economic growth. GDP growth is dependent while selecting the other mentioned variables as independent. After confirming that all the variables are first difference stationary, the Johansen co-integration approach has been applied to detect links between variables. Results reveal that all the variables like human capital, employed labor force, FDI, polity index, and public expenditure positively impact Pakistan's GDP growth. They said empirical investigation finds that human capital, labor force, polity index, FDI, and public expenditure can increase economic development in Pakistan. Overall, these factors collectively add to sustainable economic progress and resilience.