Impact of Financial Development and Innovation on Sustainable Economic Growth: Evidence From Pakistan

Abstract

The research is concerned with the relationship between financial development, innovation and sustainable economic growth. The phenomenon of sustainable economic growth has gained much attention from academics and policymakers find a solution to growth problems .This study seeks the impact of financial development, innovation, Gross fixed capital formation, Energy use on sustainable economic growth in Pakistan. Financial development and innovation are generally considered as an important factor to increase the sustainable economic growth. The time series covering from 1992-2022 delivered the data with the help of World Development Indicator. This study refers the technique of Auto Regression Distributed Lag model to investigate the relation between financial developments, and innovation on sustainability growth. This study filled the gap in the literature by exploring the financial development, innovation and economic growth relationship using time series data .The empirical result shows that financial development, innovations are significantly increasing the economic growth and both are positively linked with sustainable economic growth. The purpose of financial sector and innovation is increase employment, efficiently resources allocation consumption and production in long term. Furthermore, this research urges for the enforcement of comprehensive policies which stimulate the promotion of investment, innovation, production and efficient energy use as well as guarantee sustainable economic growth and enhanced living standards for all economy.