HIGH-TECH EXPORTS AND THE FUTURE OF PAKISTAN’S SERVICE INDUSTRY: EXAMINING THE ROLE OF TECHNOLOGY INVESTMENT, DIGITAL LITERACY, AND ICT EXPORTS IN DRIVING SECTORAL GROWTH

Abstract

In the contemporary digital era, the growth and competitiveness of service sectors are increasingly driven by technological advancement, human capital development, and global connectivity. For Pakistan, where the service sector represents a substantial proportion of the national economy, identifying the determinants of sectoral expansion is critical for sustainable economic development. This study investigates the effects of technology investment, digital literacy, and ICT service exports on Pakistan’s service sector growth over the period 2000–2024. Employing a Robust Least Squares regression framework, the analysis incorporates Research and Development (R&D) expenditure, High-technology Exports (HTE), Literacy Rate (LR), and ICT Service Exports (ICT) as explanatory variables. Empirical findings indicate that R&D investment, literacy rate, and ICT service exports exert a significant and positive influence on SVA, highlighting the pivotal role of human capital and digital innovation. Conversely, HTE exhibits a negative impact, signaling its limited current contribution to sectoral growth. Anchored in Endogenous Growth and Human Capital theories, the study underscores the necessity of strengthening digital literacy and R&D capacity to enhance Pakistan’s service sector performance, fostering alignment with the Sustainable Development Goals (SDGs) and supporting broader digital economy objectives.

Keywords: Service Sector Growth; Digital Literacy; ICT Service Exports; Human Capital; Research and Development; Pakistan Economy.