Exploring Pakistan’s Legal Challenges in Artificial Intelligence Regulation: A Data-Driven Approach

Abstract

Purpose: The study aims to analyze the interaction between technological access and institutional quality in determining GDP per capita within a developing country context.

Design/methodology/approach: Using time-series data from 1996 to 2023, the study utilizes Structural Equation Modeling (SEM) for the purpose of assessing direct and indirect effects among the variables: internet users, patent applications, rule of law, and per capita GDP. Model fit was assessed using indicators such as SRMR and NFI to evaluate robustness.

Findings: The results show that internet utilization significantly enhances GDP per capita (β = 0.657, p < 0.001) and stimulates innovation through increased patent applications (β = 0.799, p < 0.001). Patent applications also significantly enhance economic growth (β = 0.297, p = 0.024), confirming the mediating variable of innovation (β = 0.237, p = 0.033). Although internet usage has a positive impact on the Rule of Law Index (β = 0.362, p = 0.055), its indirect effects on GDP through the rule of law were not significant (β = 0.041, p = 0.366). Measures of model fit (SRMR = 0.078; NFI = 0.948) indicate a good-fitting structural model.

Research limitations/implications: The analysis is also limited to using secondary data, which may not capture micro-level socio-economic impacts. The generalizability of findings is also restricted to Pakistan and may differ in other developing nations with different governance systems.

Practical implications: Policymakers need to give priority to broadening internet penetration and encouraging innovation infrastructure as the principal drivers of economic growth. Intellectual property protection and R&D policies can be strengthened to enhance the financial contributions of digital change. Although governance enhancements are significant, the research here indicates that technology adoption and innovation have the potential to contribute directly to GDP.

Originality/value: This study makes an important empirical contribution by bringing together digital access, innovation, and institutional governance research in one framework to explain economic development in an emerging economy. The study offers empirical evidence that internet-driven innovation is a key channel through which digital infrastructure boosts national economic performance in the case of Pakistan.