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Implications of De-Industrialization for Poverty and Income-Inequality in Pakistan

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  • Bushra Yasmin Wajeeha Qamar

    (Fatima Jinnah Women University, Department of Economics, Rawalpindi M. Phil student at Fatima Jinnah Women University, Department of Economics, Rawalpindi)

Abstract

This study endeavors to identify the dynamic link among growth, inequality and poverty, instigated from deindustrialization, in Pakistan over the time period 1970-2013. The Reduced-form Vector Autoregressive Model (VAR) is applied to estimate the empirical model. According to the results, trade openness has declining (mounting) impact on poverty (income inequality) over the specified time period. Moreover, the industrial sector share in GDP has appeared as a major contributing factor in tackling income inequality and poverty. This implies that the deindustrialization, as an emergent of trade liberalization, neutralizes the policy effect for income distribution and poverty in Pakistan. Besides, the Kuznet’s hypothesis has been proved to be true in case of Pakistan where GDP growth has led to increase in the income inequality. The role of industrial sector growth in tackling poverty and income inequality has emerged as vital but the move towards rapid trade liberalization has placed this sector in more competitive position and the persistent nature of income inequality has subdued the growth effects on poverty. The results underlie very pertinent policy to focus on the sector-specific growth in order to tackle the welfare issues. And a cautious move towards trade liberalization is also suggested. JEL Classification: O15; I32; F62

Suggested Citation

  • Bushra Yasmin Wajeeha Qamar, 2015. "Implications of De-Industrialization for Poverty and Income-Inequality in Pakistan," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 18(2), pages 45-68, November.
    • Handle: RePEc:zag:zirebs:v:18:y:2015:i:2:p:45-68
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    Citations

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    Cited by:

    1. Ghulam Yahya Khan & Salik Mehboob & Lydia Bares Lopez, 2018. "Deindustrialization and Economic Growth: Empirical Evidence from Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(4), pages 462-475, December.

    More about this item

    Keywords

    Inequality; Poverty; Globalization;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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