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In this study, a team of local researchers in Pakistan used a combination of (CGE) modeling and microsimulation techniques to simulate the impacts of a 4% increase of the “public infrastructure investment (PII) to GDP” ratio – in line with the intent document in the Planning Commission’s Framework for Economic Growth – on several aspects of the national economy. The simulations were conducted using two different scenarios of financing mechanisms – one supposed that the increase in public spending would be financed with international loans, and the other with taxation (production tax) revenues. The analysis shows that, in the long run, regardless of the selected financing mechanism (tax or international loan). increased investments in public infrastructure lead to macroeconomic gains and improvements in poverty level. Find out more about the researchers' findings and ensuing policy recommendations through the following PEP publications:

Country: 
Pakistan
Project code: 
MPIA-12304
Image: 

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