Amber, Fatima and Muhammad, Shahbaz and Faridul, Islam (2012): Nexus of trade, investment and poverty: evidence from Pakistan.
Download (187kB) | Preview
Poverty alleviation, a complex multidimensional phenomenon, is among the most formidable challenges for policymakers in developing nation. Despite mixed results on the long term impact on poverty, the general view is that if implemented and managed carefully, trade and investment can help promote economic growth and alleviate poverty. The paper empirically examines the impact of trade and investment on poverty alleviation in Pakistan by employing the Johansen-Juselius (1990) approach to cointegration for a long run relation; and the error correction mechanism for the short run dynamics. The results suggest that poverty alleviation policy has brought fruition in Pakistan and helped achieve the objective both in the short and the long run. The findings should help policymakers determine appropriate strategy in addressing the economic growth vis-à-vis poverty. While investment is a key to promoting economic growth, trade openness can also help by improving business climate through access to modern capital and technical know-how; and lead to sustained economic growth in Pakistan.
|Item Type:||MPRA Paper|
|Original Title:||Nexus of trade, investment and poverty: evidence from Pakistan|
|English Title:||Nexus of Trade, Investment and Poverty: Evidence from Pakistan|
|Keywords:||Trade, Investment, poverty, cointegration|
|Subjects:||F - International Economics > F1 - Trade|
|Depositing User:||Muhammad Shahbaz|
|Date Deposited:||29. May 2012 23:06|
|Last Modified:||14. Feb 2013 06:23|
Addison, D.,Wodon, Q. (2008), “Macroeconomic volatility, private investment, growth, and poverty in Nigeria” MPRA Paper No. 11113, October.
Agénor, P-R. (2004),“Does globalization hurt the poor? International Economics and Economic Policy, 1, pp: 21-51.
Anderson et al (2006), “The Role of Public Investment in Poverty Reduction: Theories, Evidence and Methods” Overseas Development Institute Working Paper 263.
Annabi N. et al (2005), “Trade Liberalization, Growth and Poverty in Senegal: a Dynamic Micro simulation CGE Model Analysis” Cahier de recherche/Working Paper 05-12 May.
Anwar, T. (2004), “Recent macroeconomic developments and implications for poverty and employment in Pakistan: The cost of foreign exchange reserve holdings in South Asia” ASARC Working Paper 2004-14.
Bannister, G. J.,Thugge, K.(2001), “International trade and poverty alleviation” IMF Finance and development , A quarterly magazine of the IMF Volume 38, Number 4 December.
Berg, A., Krueger, A. (2003), “Trade, growth and poverty: A selective survey” IMF working paper WP/03/30.
Bhagwati, J. (2001), “Free trade and labor, Abbreviated version appeared in The Financial Times on August 29, 2001.
Bhagwati, J. (2004), “Anti-globalization: why? Journal of Policy Modeling, 26, pp: 439-63
Bhagwati, J.,Srinivasan, T. N. (2002), “Trade and poverty in the poor countries” American Economic Review, 92, pp: 180-183.
Biswas, R.,Sindzingre, A. (2006), “Trade openness, poverty and inequality in India: literature and empirics at the sub-national level” Presented at International Conference ‘The Indian Economy in the Era of Financial Globalisation’ Fondation Maison des Sciences des l’Homme and Economix, University Paris 10-Nanterre Paris, Sept, 28-29.
Breusch, T.S., Pagan, A. R. (1980), “The Lagrange Multiplier test and its application to model specification in econometrics, Review of Economic Studies, 47, pp: 239-254.
Cicowiez, M., Conconi, A. (2008), “Linking trade and pro-poor growth: A survey” Poverty and Economic Policy (PEP) Research Network, Inter-American Development BankIntegration and Trade Sector.
Cockburn, J., Giordano, P. (2008), “Trade and Poverty in the Developing World” Poverty and Economic Policy (PEP) Research Network, Inter-American Development Bank Integration and Trade Sector.
David. M., Schott, A. (2005), “Macroeconomics: Understanding the Wealth of Nations” A Handbook Published by John Welly & Sons: Ed. New York.
Demeke, M., Guta, F., Ferede, T. (2003), “Growth, employment, poverty and policies in Ethiopia: an empirical investigation” Issues in Employment and Poverty Discussion Paper12 August.
DFID, (2002), “Trade matters eliminating world poverty” www.dfid.gov.uk.
Dickey, D. A., Fuller, W. A. (1979), “Distribution of the estimation for autoregressive time series with a unit root” Journal of American Statistical Association, 79, pp: 355-367.
Dodzin, S., Vamvakidis, A. (2004), “Trade and industrialization in developing economies”, Journal of Development Economics,75, pp: 319-328.
Engle, R. F., Granger, G.W.J. (1987), “Co-integration and error correction: Representation, estimation and testing”. Econometerica, 55, pp: 251-276.
Fan S. Nyange, D., Rao, N. (2005), “Public investment and poverty reduction in Tanzania: Evidence from Household survey data” Development strategy and governance division DSGD discussion paper No. 18.
Fan S. Zhang, L., Zhang, X. (2000), “Growth and poverty in rural China: The role of public investments” EPTD Discussion Paper No. 66 June.
Fan S. Zhang, L., Zhang, X. (2002), “Growth, inequality, and poverty in china the role of public investments” International food policy research institute Research report no. 125 April.
Fan S., Hazell, P. B. R., Sukhadeo, T. (1999), “Linkages between Government Spending, Growth, and Poverty in Rural India” International Food Policy Research Institute (IFPRI) Research reports no. 110.
Fan, S., Zhang, X. (2004), “Reforms, investment and poverty in rural China” Economic Development and Cultural Change, 52, pp: 395-422.
Fan, S., Zhang, X. (2008), “Public expenditure, growth and poverty reduction in rural Uganda” African Development Review, 20, pp: 466-496.
Federica, M., Claire, H. (2001),“Perceptions of poverty among poor livestock keepers in Kenya: A discourse analysis approach, Journal of International Development, 13, pp: 863-875.
Gauci. A.,Karingi, S. N. (2008), “Trade and poverty: The little we know of the effect in Africa and possibly why” Poverty and Economic Policy (PEP) Research Network, Inter-American Development Bank Integration and Trade Sector.
Gillson, I., Page, S. (2004), “Trade, investment and poverty” Overseas development institute www.odi.org.uk/opinions.
Goldin, I., Rodrick, D., Garrett, M. (2002), The background paper distributed at the World Economic Forum in Davos.
Harrison, A., McMillan, M. (2007), “On the links between globalization and poverty” Journal of Economic Inequality, 15, pp: 123-134.
Hassan, M.S.,Siddiqui, M.W. (2010), “Trade poverty nexus: An empirical investigation from Pakistan” Interdisciplinary Journal of Contemporary Research in Business, 2, pp: 500-520.
Jamal, H. (2006), “Does inequality matter for poverty reduction? Evidence from Pakistan’s poverty trends” The Pakistan Development Review, 45, pp. 439-459
Johansen, S., Juselies, K. (1990), “Maximum likelihood estimation and inferences on co-integration” Oxford Bulletin of Economics and Statistics, 52, pp.169-210.
Kakwani, N., Khandker, S., Son, H. H. (2004), “Pro-poor growth: concepts and measurement with country case studies, United Nations Development Programme, International Poverty Centre.
Kakwani, N., Prakasah, B. and Son, H. (2000), “Growth, inequality and poverty and introduction” Asian Development Review, 18, pp: 1-21.
Kakwani, N., Son, H. H. (2004), “Pro-poor growth: concepts and measurement” PIDE, 19TH Annual Conference, 13th -15th January, Islamabad.
Kalim, R., Shahbaz, M. (2009), “Remittances and poverty nexus: Evidence from Pakistan”, International Research Journal of Finance and Economics, 29, pp: 46-59.
Khan, A.R. (2007), “Growth, employment and poverty: An analysis of the vital nexus based on some recent UNDP and ILO/SIDA studies” DESA Working Paper No. 49 July.
Krishna, P. (2003), “Are regional trading partners "natural"? Journal of Political Economy, 111, pp: 202-231.
Lola, G. K., (2009), “Globalization and poverty: comparative analysis of Bangladesh and Nigeria”, ASBBS Annual Conference: Las Vegas, 16, 1-13.
MacKinnon, J. G. (1991), “Critical values for cointegration tests, in long run economic relatinhsips. Readings in cointegration, eds. R. F. Engle and C. W. J. Granger, New York: Oxford University Press, pp: 266-276.
MacKinnon, J. G. (1996),“Numerical distribution functions for unit root and cointegration tests, Journal of Applied Econometrics, 11, pp: 601-618.
Malik, S.J. (2006), “Globalization and its impact on poverty in Pakistan”, A Background Paper for the Pakistan Poverty Reduction Strategy II prepared under contract with the United Nations Development Program for Pakistan.
Mujeri, M., Khondker, B., (2002), “Poverty implications of Trade liberalization in Bangladesh: A general equilibrium approach”, Department For International Development (DFID) UK.
Mujeri, M., Khondker, B., (2002). Poverty Implications of Trade Liberalization in Bangladesh: A General Equilibrium Approach. Globalisation and Poverty Programme, funded by the Department for International Development (DFID) UK.
Mujeri, M.K. (2002), “Bangladesh: Bringing poverty focus in rural infrastructure development” Issues in Employment and Poverty Discussion Paper No.6 November.
Nahar, B., Siriwardana, M., (2009). Trade Liberalisation and Poverty in Bangladesh: A General Equilibrium Approach. Paper presented at Australian Agricultural and Resource Economics Society 53rd Annual Conference, 10-13 February, 2009, Cairns, Australia.
Okpe, I. J., Abu, G.A. (2009), “Foreign private investment and poverty reduction in Nigeria (1975 to 2003)” Journal of Social Science, 19, pp: 205-211.
Osmani, S.R., (2005), “The impact of globalization on poverty in Bangladesh”. Working Paper No. 65, Policy Integration Department National Policy Group International Labour Office Geneva.
Phillips, P.C.B., Perron, P. (1988), “Testing for a unit root in time series regressions" Biometrika, 75, pp: 335-346.
Rahman, M.F., (2005). Globalization and its Impact on Bangladesh Economy. Mater’s Thesis. M.D.S, National University of Bangladesh.
Raihan, S., (2008). Trade Liberalization and Poverty in Bangladesh. Macao Regional Knowledge Hub, Working Papers, No. 15, December 2008.
Robertson, D. (1940), “Essays in monetary theory”, London: P.S. King & Son.
Shahbaz, M., (2008), “Does globalization benefit the poor? Evidence from Pakistan”, Journal of Economic and Social Policy, 5, pp. 61-80.
Shahbaz, M., Ahmad, Q. M., Ahmad, M. H., Butt, M. S. (2007), “An Empirical Investigation of the Relationship between Trade Liberalization and Poverty Reduction: A Case for Pakistan” The Lahore Journal of Economics, 12, pp. 99-118.
Shahbaz, M., Naveed, A. (2007), “Macroeconomic determinants of poor’s happiness” Paper Presented at International Conference on Gross National Happiness in Thailand.
Shahbaz, M., Naveed, A. (2008), “Macroeconomic Determinants of Poor’s Happiness” Journal of Economic and Social Policy 5, pp. 9-27.
Short, C., (2002). Trade and poverty. Briefing October, 2002, Department for International Development, Palace Street, London.
Stiglitz, J. (2003), “Globalization and the economic role of the state in the new millennium, Industrial and Corporate Change, 12, pp: 3-26.
Stiglitz, J. (2004),“Globalization and growth in emerging markets, Journal of Policy Modeling, 26, pp: 465-484
Tanga, P.T. (2009), “The contribution of Chinese trade and investment towards poverty alleviation in Africa: Evidence of divergent views from Lesotho” Journal of Social Science, 19, pp: 109-119.
The World Bank (2002) Globalization, growth and poverty: A review of international evidence. Washington DC.
The World Bank (2010), World Development Indicator. http://data.worldbank.org/data-catalog/world-development-indicators.
Thorat, S., Fan, S. (2007), “Public investment and poverty reduction: Lessons from China and India” Economic and Political Weekly February 24.
Torm, N. (2003), “The nexus of economic growth, employment and poverty during economic transition: An analysis of Armenia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan” Issues in Employment and Poverty Discussion Paper no. 13 October.
White, H. (1980), “A heteroscedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity, Econometrica, 48, pp: 817-838..
Winter L. A. et al (2004), “Trade Liberalization and Poverty: The Evidence So Far” Journal of Economic Literature, 42, pp. 72–115.
Winters, L. A. (2002), “Trade liberalization and poverty: What are the links?” The World Economy, 25, pp: 1339-1367.
Winters, L.A. (2000), “Trade liberalization and poverty”, Discussion Paper No7, Poverty Research Unit, University of Sussex.