Nexus of trade, investment and poverty: evidence from Pakistan

Fatima Amber, Muhammad Shahbaz and Faridul Islam ()

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Trade; Investment; poverty; cointegration (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2012-05-05, Revised 2012-05-20
New Economics Papers: this item is included in nep-cwa
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Journal Article: Nexus of Trade, Investment and Poverty: Evidence from Pakistan (2012)
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