Abstract:
Compared to the historical and even contemporary experience of India,
Pakistan has long been regarded as a “dependent” economy. Gross domestic product
growth in Pakistan is typically argued to be contingent on external factors: trade,
financial flows, and the interdependence of asset markets. Beyond the rhetoric, there
is only ambiguous and contradictory empirical evidence to support this view. This
paper offers a new methodology, that of case studies of growth and stagnation, to test
the hypothesis of dependency. The results show that growth in Pakistan is influenced
by external factors, but that growth is driven primarily by the dynamics of the
domestic economy.
