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Linkages between trade openness, natural gas production and poverty in Pakistan: A simultaneous equation approach

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  • Ullah, Irfan
  • Zhang, Jiawei
  • Rehman, Alam
  • Zeeshan, Muhammad

Abstract

China-Pakistan Economic Corridor (CPEC) is a recent trade project which intends to increase trade between the two countries and has the potential to boost industrial production in Pakistan. Since Pakistan's energy production is mostly fossil fuel-based, the recent natural gas discoveries could potentially impact local industries and poverty. The past research has not explored the association between Trade, Poverty and Natural Gas production; therefore, this study investigates a nexus between trade, natural gas, and poverty in Pakistan for the period 1990–2018. We applied the simultaneous equation method for data analysis. The results of the study suggest that trade liberalization and natural gas both increase industrial production, which, in turn, reduces the level of poverty in the country. Therefore, the government needs to further strengthen trade ties with neighbor countries and encourage the discovery of natural gas exploration to overcome ongoing energy shortage. Additionally, the government should find alternate sources of energy, like solar energy and wind energy.

Suggested Citation

  • Ullah, Irfan & Zhang, Jiawei & Rehman, Alam & Zeeshan, Muhammad, 2022. "Linkages between trade openness, natural gas production and poverty in Pakistan: A simultaneous equation approach," Resources Policy, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:jrpoli:v:79:y:2022:i:c:s0301420722005499
    DOI: 10.1016/j.resourpol.2022.103106
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    Keywords

    Trade; Natural gas; Poverty; Pakistan;
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