Energy scarcity and economic stagnation in Pakistan

Abstract

In this research, the link between the energy crisis in Pakistan and its economic growth was researched into the very intricate level. Energy is the driving force of the economy; the mechanism responsible for movement, development and advancement in any economy. For the illustration of this relationship, we applied a time series data which was running from the year 1983 to 2022. Under this scheme, Gross Domestic Product (GDP) is the main target variable which signifies the wellness of the economy as a whole. The independent variables affect the input to variables by energy consumption (EC) and trade.
In the study, researchers investigated these relationships by applying the ARDL (Autoregressive Distributed Lag) technique. This way, it was possible to calculate both short-term and long-term effects of energy consumption and trade on using GDP as a measuring tool. The results of the now study display a powerfully gripping plot. Moreover, the country of Pakistan has witnessed outstanding improvements in its GDP, through major increase of energy consumption, in either the short-term or long-term period. Consequently, it can be a domino effect. Energy Absorption exerts an influence on the creation and development of Industries. Such industry growth acts as a multiplier effect, generating more jobs, leading to a rise in incomes and consequently increasing the country's GDP. However, trade does matter too, albeit neutrally in the short run and more tangibly in the long-run. The growing trade activities supplement the export options, which is a source of valuable foreign currency for the economy. With this financial infusion the grounds for economic expansion become even more solid.
The researchers suggested to the government of Pakistan the two-pronged approach based on the results of the survey. Above all, we must make certain that such projects will be novel, better, and more effective. Looking into and supporting the use of renewable energy sources can be a way to ensure that there is sustainability in the long term. The appropriate use of the already existing energy resources is also important. To get the best out of the current resources, the solution could be tackling with the issue of energy theft and outdated infrastructure. Pakistan can certainly light the way to robust and stable economic development by applying these ideas to real life.