The Role of Macroeconomic Instability on Human Development in Case of Selected Developing Countries

Abstract

The Present study is an effort to analyze the role of macroeconomic instability on human development index in selected of developing countries. This study examines the short run as well as long run association between macroeconomic instability and human development index by using panel data of 22 selected developing countries during 1992 to 2019. For this purpose, comprehensive macroeconomic instability index is constructed with the help of macroeconomic variables as public deficit to GNP ratio, external debt to GNP ratio, real exchange rate, and inflation rate. For using the panel co-integration and pooled mean group estimation techniques, time-dimension relationship has been analyzed. The empirical findings of the study disclose that macroeconomic instability significantly reduced the human development and the relationship seemed to be insecure and bi-directional both in the short run and in long run. The study recommends that human development can be improved through macroeconomic stability beside through increasing personal remittances, foreign direct investment and exports of goods and services in selected developing countries.