CPEC in the Perspective of Pakistan Economy: A Comprehensive Analysis

Abstract

China Pakistan Economic Corridor (CPEC) is a part of multidimensional infrastructural initiative known as ‘Belt and Road Initiative (BRI) which attempts to bond economies, regimes and societies in Europe and Asia. In this background, objective of this study is to analyze CPEC in the light of Pakistan economy. Vector Autoregressive (VAR) model, Vector Error Correction Mechanism (VECM) and Granger Causality are applied to data from 1980 to 2016 for discovering interactions of infrastructure and sustainable development. In the long run, causality runs from economic and social component of sustainable development to infrastructure. However, in the short run, energy infrastructure has a causal connection with sustainable development and its economic component. Short run associations of past is found to have the force to enlarge future responses. The statistical context of this study, as a constraint, is not sufficient to highlight any association between infrastructure and environment.