Impact of Gwadar Port on Economic Growth of Pakistan

Abstract

This research analyzes the impact of Gwadar Port on the GDP of Pakistan, with particular emphasis on five important variables: foreign direct investment (FDI), labor participation, trade openness, tax collections, and environmental pressures. The study uses yearly time-series data covering the period between 2000 and 2025 and utilizes an Ordinary Least Squares (OLS) regression model. The findings show that all the explanatory variables are positively and significantly influencing GDP per capita, where FDI and labor force participation are the most significant contributors. Trade openness also positively influences GDP, confirming classical trade theory, and tax revenues underscore Gwadar's taxing significance. The positive CO2 emissions-GDP relation mirrors the Environmental Kuznets Curve, showing that growth is presently linked with environmental costs. Diagnostic tests establish the soundness of the model, and descriptive statistics show stability in GDP and labor participation but instability in FDI and emissions. The results are consistent with Hirschman's linkage theory and Krugman's core–periphery model, revealing Gwadar's revolutionary role in re-making Pakistan's economic geography. The research concludes that Gwadar Port is both a chance and a burden: it can fuel Pakistan's development and regional integration in trade, but inclusive and sustainable policies are required to cope with environmental and equity issues.