Exploring symmetric and asymmetric nexus between corruption, political instability, natural resources and economic growth in the context of Pakistan

Pakistan has witnessed political instability since its inception in 1947 till 2008. But after the year 2008, somehow shadows of stability in democratic regimes have been seen. Over time, political instability substantiates the roots of corruption in the country. Which has affected the natural resources extraction and management that has suffered the economic growth of the country to a greater extent. Pakistan is an emerging country with Islamic values where the index of corruption is very volatile and a hard debatable phenomenon along with political instability and abundance of un-extracted natural resources. These factors have slowed down the economic growth of the country with rising debts, trade deficits, and current account deficits. The government needs to adopt a well-established framework to comprehend and better deal with these issues, as these serious issues are noticeable concerns that directly affect the various economic dynamics of the country. Instead of the abovementioned reasons, we tried to explore the relationship of these variables to understand the magnitude of effect that political instability and corruption carry towards suffered economic growth. We applied linear ARDL and non-linear ARDL using the data from 1996 to 2018. Both methodologies validate the hypothesis in the context of Pakistan. Our study results demonstrated that natural resources intensify GDP in the short as well as long-run, and political instability negatively affect country's GDP. Whereas corruption increases GDP in the short-run while decreases GDP in the long-run. However, asymmetric findings in the long-run display that a rise in corruption reduces GDP, and a decrease in Corruption intensify GDP. The causality relationship also supports the above results and recommend policies to counter rent-seeking and patronage act aiming to provide a more transparent environment in the country, which will resultantly control the noticeable issues of political instability, corruption and abundance of hidden un-extracted natural resources and likely to contribute to the economic growth and prosperity of the country.

Automated summary

Pakistan has faced political instability and corruption issues that have hindered its economic growth, despite its potential with abundant natural resources. However, implementing policies to counter these challenges could lead to a more transparent and prosperous environment for economic development in the country.