Urbanization and Poverty Reduction: A Case Study of Pakistan

The IUP Journal of Infrastructure, Vol. VIII, No. 4, pp. 23-37, December 2010

Posted: 12 Feb 2011

See all articles by Muhammad Qaiser Shahbaz

Muhammad Qaiser Shahbaz

COMSATS Institute of Information Technology (CIIT)

Naveed Aamir

Social Policy and Development Centre

Muhammad Shahbaz Shabbir

COMSATS Institute of Information Technology (CIIT)

Date Written: December 2010

Abstract

The relationship between poverty and urbanization along with a battery of poverty determinants have been examined. For this purpose Autoregressive Distributed Lag (ARDL) bounds testing has been applied to investigate the cointegration. Our empirical analysis shows strong evidence of the fact that in Pakistan, poverty is mostly influenced by increasing macroeconomic shocks. Improvement in the inflow of international remittances indicates that it helps in reducing poverty. Urbanization is reducing poverty but its impact is quite negligible. In fact, this poverty reduction effect of urbanization appears more in the short span of time as compared to the long-run. The ever increasing inflationary pressure lowers the real value of nominal assets used for transactions in order to purchase basic necessities of life. Poverty trends are lowering through agriculture and trade-openness thereby showing a positive impact on the well-being of poor segments of population. But economic growth in Pakistan is creating higher poverty among lower classes and benefits of this growth accrue only to rich classes. Considering the tax structure, major revenue is generated through indirect taxes, therefore, increased tax imposes heavy burden. Moreover, increased poverty in Pakistan is also on account of big size of government administrative expenditures.

Suggested Citation

Shahbaz, Muhammad Qaiser and Aamir, Naveed and Shahbaz Shabbir, Muhammad, Urbanization and Poverty Reduction: A Case Study of Pakistan (December 2010). The IUP Journal of Infrastructure, Vol. VIII, No. 4, pp. 23-37, December 2010, Available at SSRN: https://ssrn.com/abstract=1758663

Muhammad Qaiser Shahbaz (Contact Author)

COMSATS Institute of Information Technology (CIIT) ( email )

Park Road
Chak Shahzad
Islamabad, North-West Frontier Province 44000
Pakistan

Naveed Aamir

Social Policy and Development Centre ( email )

Karachi
Pakistan

Muhammad Shahbaz Shabbir

COMSATS Institute of Information Technology (CIIT) ( email )

Park Road
Chak Shahzad
Islamabad, North-West Frontier Province 44000
Pakistan

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