Targeted infrastructure investment and financial reforms drive sustainable economic growth in SAARC nations.
Authors
Vinay Khandelwal, Faculty of Finance, ICFAI Business School, ICFAI University, Jaipur, India
Varun Chotia, Department of Economics, Faculty of Economics, Jaipuria Institut of Management, Jaipur Campus, India
Prashant Sharma, Professor, Jindal School of Banking and Finance, O.P. Jindal Global University, Sonipat, Haryana, India
Swati Soni, Department of Management, Faculty of Management, Jaipuria Institute of Management, Jaipur Campus, India
Sushil Kalyani, Department of Finance, Faculty of Finance, NIIT University, Neemrana, India
Summary
This study investigates the interconnected roles of infrastructure development, financial growth, and economic growth in SAARC nations. Using principal component analysis, the paper develops a composite infrastructure development index, which integrates factors such as access to electricity, telecommunications, air transport, and agricultural land use. This index serves as a comprehensive measure to assess and compare infrastructural progress across the region.
Econometric analyses, including Pedroni’s and Kao’s cointegration tests, reveal long-term associations between the studied variables. The results demonstrate a bidirectional relationship between trade openness and GDP growth in the short term, as well as unidirectional influences from inflation to financial development and from infrastructure development to inflation. However, findings vary across SAARC countries, reflecting their diverse economic structures and development stages. Notably, Afghanistan is excluded due to data limitations, emphasizing the region-specific focus of the results.
The study highlights the critical role of targeted infrastructure investment and financial sector reforms in fostering sustainable economic growth. Policymakers are encouraged to consider these findings when designing synchronized public and private sector initiatives to bridge development gaps. By offering detailed insights into region-specific dynamics, this study enriches understanding of the complex interplay between infrastructure, finance, and economic growth in emerging economies.
Published in: Problems and Perspectives in Management
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