What are the Factors Affecting Poverty in Pakistan?
Authors
MUHAMMAD AJMAIR, ABDUL GHAFAR KHAN, FARRUKH ISHTIAQ and LUQMAN NAWAZ
Abstract
Objective of this research was to find out determinants of poverty in Pakistan. Auto regressive distributed lag (ARDL) bound testing was used to study the drivers of poverty in Pakistan. The annual data was used during the period 1990-2020 that was taken from the Economic Survey of Pakistan and World Bank’s World Development Indicators (2020). Relationship between GDP growth and poverty is negative. Inflation affected poverty negatively and insignificantly. Relationship between trade and poverty is positive but insignificant. Population and poverty are related negatively and significantly. Results further show that no serial correlation, no autoregressive conditional heteroscedasticity (ARCH) and no heteroscedasticity were found out. Normal distribution of stochastic disturbances was observed when normality test was applied. Best fitness of estimation models was also observed. Overall results showed satisfactory residual properties of error correction model. Stability tests of short and long run estimations confirmed the stability of estimates having no structural breaks. Government should discourage the factors that are enhancing the poverty. Inflation should be controlled to one digit. GDP should be enhanced. Development expenditures should be increased. Exports should be encouraged and imports should be decreased. Population should be provided technical education particularly to youngsters. Exports should be encouraged and imports should be decreased. Population should be provided technical education particularly to youngsters.