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.