Examining Linkages between Poverty Alleviation and Macroeconomic Performance in Pakistan

Abstract

This study undertakes an empirical exploration of the intricate interplay between macroeconomic variables and poverty in Pakistan. By employing an autoregressive distributive lag model, we scrutinize both short- and long-term relationships between these critical factors over a span of 41 years: 1980-2021. Our findings elucidate that in the short-run, GDP, inflation, and education exhibit negative impacts on poverty, while in the long-run, GDP, inflation, interest rates, exchange rates, and education maintain negative associations with poverty. Moreover, imports, exports, and the balance of payments show no significant short-term impact on poverty, but in the long-run, they establish a positive relationship with poverty. These results underscore the imperative of enhancing the education system, particularly in technical education, as a means to combat poverty. Furthermore, improving the ease of doing business to attract foreign investment emerges as a crucial avenue for stimulating economic activity, reducing unemployment, and alleviating poverty.