Regional Growth Causalities, Dependency and Integration among the Provinces of Pakistan

Tahir Sadiq, M. Aslam Chaudhary and Aribah Aslam

Abstract

The paper addresses an empirical question whether the provinces of Pakistan are growing equitably and or integrating over time. Regional growth inequalities and deprivation among provinces of Pakistan is one of the hot issues. It is a general perception that small provinces are neglected in the development process, while focus of development policies was on large provinces. Therefore, this study has investigated growth dependency of provinces among each other. The study applied Engle Granger co-integration and Granger causality test to find the long run and short run relationships and growth causalities among provinces. The empirical evidences indicated that there exist long run and short run relationships between large provinces. However, the growth of small provinces (KPK and Baluchistan) depends on the growth of large provinces, Punjab and Sindh. Punjab effects growth of Sindh; both in short and long run but Sindh effects economic growth of Punjab, only in the long run. Such a strong relationship hardly exists for small provinces; i.e. KPK and Baluchistan. The trickled down effect is not evident for small provinces. The small provinces are less beneficial from this relationship. Besides, the growth of small provinces is dependent upon the performance of large provinces, such dependent nature of growth of small province may have created a sense of deprivation in small provinces. Thus, there is a need to integrate small provinces in to the main stream of economic growth by allowing economic policies to be directed towards deprived region (provinces) of Pakistan. It will help to improve equitable growth and integration of the small provinces in to the main stream of national development