Cross-Border Support: A Solution to Poverty and Inequity in Pakistan

Authors

  • Sana Ashraf PST, GGPS, Muhammad Pur Khokhar, Pakistan Author
  • Shahroz Ashraf Assistant Director, State Bank of Pakistan, Banking Services Corporation (BSC) Multan, Pakistan Author
  • Asad Abbas Lecturer in Economics, Department of Economics, COMSATS University Islamabad, Vehari Campus, Pakistan Author
  • Dr Muhammad Ramzan Sheikh Professor of Economics, School of Economics, Bahauddin Zakariya University Multan, Pakistan Author

DOI:

https://doi.org/10.61506/01.00265

Keywords:

Foreign Resources, Poverty, Inequality, ARDL

Abstract

This study aims to examine the impact of foreign resources on alleviating poverty and inequality within the context of Pakistan. Utilizing secondary data spanning from 1980 to 2022, the study employs the Autoregressive Distributed Lag Model (ARDL) to derive its findings. Two distinct models are employed to assess poverty and inequality. In the initial model, the headcount ratio serves as the dependent variable, with foreign direct investment, foreign remittances, foreign aid, external aid, gross fixed capital formation, and labor force participation rate acting as independent variables. Meanwhile, the second model employs the GINI coefficient as the dependent variable, while maintaining the same set of independent variables as the poverty model. The long-term findings of the first model reveal a negative and statistically significant relationship between remittances, foreign aid, gross fixed capital formation, labor force participation rate, and poverty. Although GDP displays a negative relationship with poverty, it lacks statistical significance, while foreign direct investment shows a positive relationship with poverty. Turning to the results of the second model, Foreign Direct Investment, remittances, foreign aid, GDP, gross fixed capital formation, and labor force participation rate are found to be significant and negatively associated with inequality. Conversely, external debt demonstrates a positive and significant relationship with poverty.

References

Abigail, E. C. (2023). Unlocking Economic Growth Through Taxation in the case Nigeria. Journal of Business and Economic Options, 6(4), 21-27.

Admas, H. R. , and Page, J. (2005). Do international migration and remittances reduce poverty in developing countries?. World Development, 33(10), 1645-1669

Akram, N. (2013). External Debt and income inequality in Pakistan. Journal of Economic literature indexed by EBSCO, 15(3), 368-385

Ali, A. (2018). Issue of Income Inequality Under the Perceptive of Macroeconomic Instability: An Empirical Analysis of Pakistan. Pakistan Economic and Social Review, 56(1), 121-155.

Ali, A., & Audi, M. (2016). The Impact of Income Inequality, Environmental Degradation and Globalization on Life Expectancy in Pakistan: An Empirical Analysis. International Journal of Economics and Empirical Research, 4 (4), 182-193.

Ali, A., Audi, M., Bibi, C., & Roussel, Y. (2021). The Impact of Gender Inequality and Environmental Degradation on Human Well-being in the Case of Pakistan: A Time Series Analysis. International Journal of Economics and Financial Issues, 11(2), 92-99.

Ali, S. , & Ahmad, N. , (2013). A time series analysis of foreign aid and inequality in Pakistan. Global Journal of management and business research Economics and Commerce, 13(5), 11-20

Alvi, E. , & Senbeta, A. (2012). Does foreign aid reduce poverty? Journal of International Development, 24 , 955-976

Antwi, S. , Mills, A.E.F.E. , &Zhao, X. , (2013). Remittances and poverty Nexus: Evidence from Ghana. International Journal of Academic Research in Economics and Management Sciences, 2(1), 206-223

Ataullah, A. , Le, H. M. , (1974). Foreign capital and Economic Performance of Pakistan. The Lahore Journal of Economics, 7(1), 1-32.

Azam, .M. , Haseeb, M. , &Samsudin, S. , (2016). The impact of foreign remittances on poverty reduction: Global Evidence. Economics and Sociology, 9(1), 264-281

Chaudhry, S. I. , & Imran, F. , (2013). Does Trade liberalization reduce poverty and inequality: Empirical evidence from Pakistan? Journal of commerce and social sciences, 7(3), 569-587

Faridi, Z. M. , & Mehmood, A. K. (2014). Workers’ remittances and poverty in Pakistan. Pakistan Journal of social sciences, 34(1), 13-27

Gonzale, Z.M. &Larru, M. J. (2014). The egalitarian impact of aid on some Latin American countries. Journal of Economics and Development Studies, 2(4), 135-149

Government of Pakistan (various issues). Pakistan Economic Survey. Ministry of Finance, Islamabad.

Gyamfi, B. A., Agozie, D. Q., & Bekun, F. V. (2022). Can technological innovation, foreign direct investment and natural resources ease some burden for the BRICS economies within current industrial era?. Technology in Society, 70, 102037.

Herzer, D. , & Nunnenkamp, P. (2012). The effect of foreign aid on income inequality: Evidence from Panel Cointegration. Kiel Working Paper No. 1762

Huang, H. C. , Teng, F. K., Tasi, L. P. (2010). Inward and outward foreign direct investment and poverty: East Asia vs Latin America. Review of world Economics, 146(4), 763-779

Ilyas, A., Banaras, A., Javaid, Z., & Rahman, S. U. (2022). Effect of Foreign Direct Investment and Trade Openness on the Poverty Alleviation in Burundi–Sub African Country: ARDL (Co-integration) Approach. Pakistan Journal of Humanities and Social Sciences, 11(1), 555-565.

Javid, M. Arif, U. & Qayyum, A. (2012). Impact of remittances on growth and poverty. Academic Research International, 2(1), 433-447.

Loko, B. , Mlachila, M. , Nallari, R. , & Kalonji, K. (2003). The impact of external indebtness on poverty in Low-income Countries. IMF Working Paper.WP/03/61

Mahmood, H, & Chaudhary. R.A. (2012). A contribution of foreign direct investment in poverty reduction in Pakistan. Middle-East Journal of Scientific Research, 12(2), 243-248.

Munir, S. , Kiani. K.A. , Khan, A., Jamal, A. (2013). The relationship between trade openness and income inequalities empirical evidence of Pakistan. Academic Journal of Management Sciences, 2(1), 21-35

Murtaza, G. , Faridi, Z. M. , (2014) Disaggregate energy consumption, Agricultural output and Economic growth in Pakistan: An ARDL Modelling Approach to Cointegration. The Pakistan Development Review, 52(4), 493-516

Mushtaq, .M. , Ahmad, K., Ahmed, S. , &Nadeem, M. (2014). Impact of FDI on income distribution in selected SAARC countries. Journal of Applied Environmental and Biological Sciences, 4(7S), 1-10

Oskooee, B. M. , & Oyolola, M. , (2009). Poverty reduction and aid: Cross country Evidence. International Journal of Sociology and social Policy, 29, 264-273

Oyedelan, O. S. , Emerah, A. A. , Ogege, S. (2013). External debt, Debt servicing and poverty reduction in Nigeria: An empirical analysis. Journal of Economics and Sustainable Development, 4(19), 174-179

Portes, V. S. L. (2009). Remittances, poverty and inequality. Journal of Economic Development, 34(1), 127-140

Sarisoy, I. , & Koc, S. , (2012). The effect of foreign direct investment on poverty: Panel regression analysis for 40 selected developing and developed countries. Journal of CU institution of Social Science, 2(1), 206-223

Sayvaya, I., & Phommason, S. (2023). Discussion on Rainy Season Road Access and Poverty Alleviation in Laos. Journal of Business and Economic Options, 6(4), 1-7.

Shamim, A. , Azeem, P. &Naqi, A.M.M. (2014). Impact of foreign direct investment on poverty reduction in Pakistan. International Journal of Academic Research in Business and Social Sciences, 4(10), 465-490.

Sheikh, R. M. , and Alam, T. (2013). Does external indebtness enhance the incidence of poverty in Pakistan? An empirical evidence. International Journal of Finance and Economics, (106), 18-23

Siddiqui, R. , & Kemal, R. A. (2006). Remittances, trade liberalization, and poverty in Pakistan: the role of excluded variables in poverty change anslysis. The Pakistan Development Review, 45(3), 383-415

State Bank of Pakistan, 2020. Handbook of Pakistan Economy.

Ucal, S.M. (2014). Panel data analysis of foreign direct investment and poverty from the perspective of developing countries. Social and behavioral sciences, 109, 1101-1105

Woldekidan, H. (2015). The role of foreign aid in reducing poverty: Time series evidence from Ethiopia. Journal of Economics and International Finance, 7(3), 59-71.

Downloads

Published

2023-12-31

Issue

Section

Articles

How to Cite

Ashraf, S. ., Ashraf, S. ., Asad Abbas, & Sheikh, M. R. (2023). Cross-Border Support: A Solution to Poverty and Inequity in Pakistan. Bulletin of Business and Economics (BBE), 12(4), 672-681. https://doi.org/10.61506/01.00265

Similar Articles

1-10 of 179

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)