Impact of Urbanization on Economic Growth: Four Sector Analysis in Case of Pakistan

Abstract

The study analyses the impact of urbanization on economic growth of Pakistan from 1975-2012. Conceptual framework of the present theory is based on the theory of Lewis (1954) and Tadaro (1976). Co-integration analysis is used to examine the impact of urbanization on economic growth of four sectors namely agriculture, manufacturing, industrial and services sector of the economy. Results show that urbanization affect economic growth significantly and they have a long run relationship. It was found that urbanization is an important determinant of economic growth but it has negative impact on economic growth in agriculture sector. However, it has positive impact on economic growth in industrial, manufacturing and services sector.

Determinants of Urbanization in Pakistan: Empirical evidence from ARDL model

“…Cities are the regions of modern living, where a greater number of educated and skilled women join the workforce. To have better employment opportunities and higher gains, urbanization is considered as a rational decision of investing human capital (Nasir & Naz, 2015). The overall world's energy use has become more than twice in last ).…”

“…The rapid growth of population, unemployment, transportation, and rapidly growing industries causes urbanization. (Nasir & Naz, 2015) concluded that urbanization is a key determinant of economic growth of industrial, services and manufacturing sectors of the economy. According to (Lucas, 2004), urban agglomeration leads to higher and efficient productivity due to knowledge spillover.…”