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

Author

Listed:
  • Sana Ashraf

    (PST, GGPS, Muhammad Pur Khokhar, Pakistan)

  • Shahroz Ashraf

    (Assistant Director, State Bank of Pakistan, Banking Services Corporation (BSC) Multan, Pakistan)

  • Asad Abbas

    (Lecturer in Economics, Department of Economics, COMSATS University Islamabad, Vehari Campus, Pakistan)

  • Dr Muhammad Ramzan Sheikh

    (Professor of Economics, School of Economics, Bahauddin Zakariya University Multan, Pakistan)

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.

Suggested Citation

  • Sana Ashraf & Shahroz Ashraf & Asad Abbas & Dr Muhammad Ramzan Sheikh, 2023. "Cross-Border Support: A Solution to Poverty and Inequity in Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(4), pages 672-681.
    • Handle: RePEc:rfh:bbejor:v:12:y:2023:i:4:p:672-681
    DOI: https://doi.org/10.61506/01.00265
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    References listed on IDEAS

    as
    1. Rizwana Siddiqui & A. R. Kemal, 2006. "Remittances, Trade Liberalisation, and Poverty in Pakistan: The Role of Excluded Variables in Poverty Change Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(3), pages 383-415.
    2. Amjad Ali & Marc Audi, 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 (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(4), pages 182-193, April.
    3. Herzer, Dierk & Nunnenkamp, Peter, 2012. "The effect of foreign aid on income inequality: Evidence from panel cointegration," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 245-255.
    4. Mr. Kadima D. Kalonji & Mr. Boileau Loko & Raj Nallari & Mr. Montfort Mlachila, 2003. "The Impact of External Indebtednesson Poverty in Low-Income Countries," IMF Working Papers 2003/061, International Monetary Fund.
    5. Amjad Ali & Marc Audi & Chan Bibi & Yannick Roussel, 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, Econjournals, vol. 11(2), pages 92-99.
    6. Steven Ongena & Shusen Qi & Fengming Qin, 2015. "Impact of Foreign Bank Presence on Foreign Direct Investment in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(4), pages 40-59, July.
    7. Gyamfi, Bright Akwasi & Agozie, Divine Q. & Bekun, Festus Victor, 2022. "Can technological innovation, foreign direct investment and natural resources ease some burden for the BRICS economies within current industrial era?," Technology in Society, Elsevier, vol. 70(C).
    8. Anisa Shamim & Pervaiz Azeem & Syed M. Muddassir Abbas Naqvi, 2014. "Impact of Foreign Direct Investment on Poverty Reduction in Pakistan," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(10), pages 465-490, October.
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