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Does Governance Contribute to Pro-poor Growth? Evidence from Pakistan

Author

Listed:
  • Rashida Haq

    (Pakistan Institute of Development Economics, Islamabad)

  • Uzma Zia

    (Pakistan Institute of Development Economics, Islamabad)

Abstract
Economic growth is a driving force in reducing poverty, but experience has shown that good governance and pro-poor choices are vitally important in the process of alleviating poverty. This paper explores linkages between governance and pro-poor growth in Pakistan for the period 1996 to 2005. The analysis indicates that governance indicators have low scores and rank at the lowest percentile as compared to other countries. The dimensions of pro-poor growth, which include poverty, inequality, and growth, demonstrate that the poor do not benefit proportionately from economic growth. It is found that poverty and inequality have worsened and the share in income and expenditure for the bottom 20 percent has also decreased, while inflation for this lowestincome group is high as compared to the highest-income group. It is also observed that approximately 25 percent households reported that their economic status was worse than in the previous year, 2004-05. The results of the study show that a strong link exists between governance indicators and pro-poor growth in the country. Econometric analysis shows that there is a strong relationship between good governance and reduction in poverty and inequality. It is concluded that greater voice and accountability, political stability, regulatory quality, and rule of law can control corruption and the pro-poor policies, which ultimately reduce poverty and inequality in the long run. To face the challenge of good governance, Pakistan needs to formulate, and implement effectively, its governance policies to improve the governance dimensions, taking account of both higher growth and the aim of achieving the Millennium Development Goals, which require halving poverty by 2015.

Suggested Citation

  • Rashida Haq & Uzma Zia, 2009. "Does Governance Contribute to Pro-poor Growth? Evidence from Pakistan," PIDE-Working Papers 2009:52, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2009:52
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    References listed on IDEAS

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    Cited by:

    1. Danish Ahmed Siddiqui & Qazi Masood Ahmed, 2019. "The Causal Relationship Between Institutions and Economic Growth: An Empirical Investigation for Pakistan Economy," Issues in Economics and Business, Macrothink Institute, vol. 5(1), pages 1-19, June.
    2. Uddin, Moshfique & Chowdhury, Anup & Zafar, Sheeba & Shafique, Sujana & Liu, Jia, 2019. "Institutional determinants of inward FDI: Evidence from Pakistan," International Business Review, Elsevier, vol. 28(2), pages 344-358.
    3. Zaman, Khalid & Khilji, Bashir Ahmad, 2013. "The relationship between growth–inequality–poverty triangle and pro-poor growth policies in Pakistan: The twin disappointments," Economic Modelling, Elsevier, vol. 30(C), pages 375-393.
    4. Shirazi, Dr. Nasim Shah & Obaidullah, Dr. Mohammed & Haneef, Mohamed Aslam, 2015. "Integration of Waqf and Islamic Microfinance for Poverty Reduction," Working Papers 1436-5, The Islamic Research and Teaching Institute (IRTI).
    5. Rabia Nazir & Mumtaz Anwar, 2013. "Growth Governance Nexus: A Case of Pakistan," Journal of Economics and Behavioral Studies, AMH International, vol. 5(8), pages 562-572.
    6. Dawood MAMMON & Huma RABBANI, 2017. "Effect of welfare and economic performance on good governance outcomes in Pakistan," Journal of Economics Library, KSP Journals, vol. 4(4), pages 451-472, December.
    7. Muhammad Khan & Muhammad Khan & Khalid Zaman & Umar Hassan & Sobia Umar, 2014. "Global estimates of growth–inequality–poverty (GIP) triangle: evidence from World Bank’s classification countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2631-2646, September.
    8. Agus Eko Sujianto & Tulus Suryanto, 2018. "Income differences, trade and Institutions: empirical evidence form low and middle-income countries," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(2), pages 217-228, April.
    9. Shah Shirazi, Nasim & Obaidullah, Mohammed, 2014. "Why Poverty Reduction Programs of Pakistan Did Not Bring Significant Change: An Appraisal," Working Papers 1435-17, The Islamic Research and Teaching Institute (IRTI).
    10. Sajjad Ahmad & Muqarrab Akbar, 2019. "A Historical Review of Governance in Pakistan (1947-2012)," Global Regional Review, Humanity Only, vol. 4(1), pages 320-325, March.
    11. Muhammad Shahid Hassan & Samra Bukhari & Noman Arshed, 2020. "Competitiveness, governance and globalization: What matters for poverty alleviation?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(4), pages 3491-3518, April.
    12. Danish Ahmed Siddiqui & Qazi Masood Ahmed, 2019. "Does Institutions Effect Growth in Pakistan? An Empirical investigation," Journal of Asian Development, Macrothink Institute, vol. 5(2), pages 1-24, April.
    13. Burak Byükoglu & Ahmet Šit & Ibrahim Halil Ekši, 2021. "Governance matters on non-performing loans: Evidence from emerging markets," PSL Quarterly Review, Economia civile, vol. 74(296), pages 75-91.

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    More about this item

    Keywords

    Governance Indicators; Pro-poor Growth; Poverty; Inequality;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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