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The Nexus Between Pro-poor Growth, Inequality, Institutions and Poverty: Evidence from Low and Middle Income Developing Countries

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Abstract

In contrast to former investigations in the growth-poverty literature, this research constructs a panel vector autoregressive model to explore the interactive relationship between income inequality, institutional quality, inclusive growth and poverty of 82 low and middle income developing countries from 1996 to 2022. In addition, we employed the impulse response function tool, which is the reaction of any dynamic system in response to some external change, to comprehend the reaction of poverty aftershocks on inclusive growth, income inequality and institutional quality variables. Finally, the study was completed by the variance decomposition of all variables. The empirical results indicate that inclusive growth is negatively significant determinant of poverty, while inequality and institutional quality are positive but insignificant. Meanwhile, income inequality and institutional quality have a significant effect on inclusive growth. From a general perspective, the results reveal that no causal relationship exists between inequality and institutional quality. The results of the variance decomposition confirm the above outcomes.

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  1. Université de Jendouba, Faculté des Sciences Juridiques, Economiques et de Gestion de Jendouba, LR : Valorisation du Patrimoine Naturel et Culturel, 8189, Jendouba, Tunisia

    Anis Ochi & Yosra Saidi

  2. Institute of Higher Commercial Studies of Carthage, University of Carthage, Carthage, Tunisia

    Mohamed Ali Labidi

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Ochi, A., Labidi, M.A. & Saidi, Y. The Nexus Between Pro-poor Growth, Inequality, Institutions and Poverty: Evidence from Low and Middle Income Developing Countries. Soc Indic Res 172, 703–739 (2024). https://doi.org/10.1007/s11205-024-03326-7

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