Abstract
This study empirically estimates a unified measure of inclusive growth for Pakistan and determines the impact of macroeconomic stability, financial deepening and structural changes on inclusive growth over the period from 1987 to 2016. Inclusive growth is measured by income growth and distributions which are calibrated by combining GDP per capita growth and income inequality GINI coefficient. We apply the microeconomic concept of a social mobility function at the Macroeconomic level to measure inclusive growth that is closer to the absolute definition of pro-poor growth. The study applied a two-step methodology to capture the empirical estimations, in the first step the study estimated inclusive growth by social function through combining the income distribution and of GDP per capita and in the second step incorporated it in time series analysis by applying standard unit root tests and autoregressive distributed lag model (ARDL) approach of Conintegration. The results are supported with standard diagnostic tests. Our results indicate that macroeconomic stability and structural changes are foundations for achieving inclusive growth. Other indicators which are included in the analysis have also some important implications, the role of external sector could also be positive with terms of trade fostering greater inclusiveness, while financial deepening has also prominent implications on inclusive growth. Financial development can lead to encourage more inclusiveness in the country.