Emphasizing the role of political leaders in shaping economic policies and their influence on economic growth of Pakistan, this study is an attempt to explain the effects of economic policy uncertainty linked with political regimes on key macroeconomic indicators including private investment, unemployment and inflation. Empirical analysis has been conducted by using Generalized method of moments (GMM) and data from 1972-2011. It has been concluded that policy uncertainty, as measured by lack of capability of government to extract tax revenues and use them for public gains, is detrimental for sustainable economic growth of economy. It creates an uncertain environment for investors and is also responsible for stagflation at certain time periods. It has also been concluded that military regimes devised short term policies which created short term economic boom, followed by recession in democratic regimes. Hence, both democratic and military regimes are responsible for inefficient resource mobilization. There is a need to establish better democratic institutions because this is the only way to move towards sustainable economic growth. Supervisor:- Dr.Musleh-ud-Din