Economic Growth and Rural Poverty in Pakistan: A Panel Dataset Analysis

Abstract

The relationship between growth and poverty is complex in Pakistan, where economic growth has not always been translated into poverty reduction. In the present work, three waves of a panel/longitudinal household survey, conducted between 2001 and 2010, were used to analyze poverty trajectories as well as the relationship between their patterns and economic growth. The findings from the panel survey reveal that more than half of the rural population remained in the state of poverty at least for one period. Poverty is transient in nature, as moving into and out of poverty is a common phenomenon in rural Pakistan. The high-growth period of 2001–2004 was not pro-poor, whereas the low-growth period of 2005–2010 was pro-poor despite the political and economic challenges. The findings reveal that policy interventions for the chronically poor may not be the same as those for the impoverished and transitory poor.

Résumé

La relation entre croissance et pauvreté est complexe au Pakistan, où croissance économique ne rime pas toujours avec réduction de la pauvreté. Nous avons utilisé trois vagues d’enquêtes auprès de ménages, menées entre 2001 et 2010, pour analyser les trajectoires de pauvreté ainsi que pour évaluer la relation entre les modèles de trajectoires de pauvreté et la croissance économique. Les résultats de l’enquête par panel révèlent que plus de la moitié de la population rurale est restée en situation de pauvreté au moins pendant un temps. La pauvreté est temporaire par nature, puisqu’il est courant d’entrer ou de sortir d’une situation de pauvreté en zone rurale au Pakistan. La période de forte croissance de 2001-2004 n’a pas profité aux personnes en situation de pauvreté, alors que la période de faible croissance qui a suivi (2005-2010) leur a profité en dépit des défis politiques et économiques. Les résultats révèlent que les politiques publiques en faveur des personnes en situation de pauvreté chronique peuvent ne pas être les mêmes que celles en faveur des personnes en situation d’appauvrissement ou de pauvreté temporaire.

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Fig. 1

Source Pakistan Economic Survey, various editions

Fig. 2

Source Estimated from two waves (2001 and 2004) of panel micro datasets

Fig. 3

Source Estimated from two waves (2004 and 2010) of panel micro dataset

Fig. 4

SourceEstimated from two waves (2001 and 2010) of panel micro dataset

Fig. 5

Notes

  1. 1.

    See, for example, Ravallion and Jalan (2001) for China; Hossain and Bayes (2010) for Bangladesh; Kurosaki (2006) and Arif and Farooq (2014) for Pakistan.

  2. 2.

    See, for example, Kurosaki (2006), Arif and Bilquees (2007), Lohano (2009), and Arif et al. (2011).

  3. 3.

    The Planning Commission of Pakistan measured the official poverty line by using the Pakistan Integrated Household Survey (PIHS) 1998–1999 dataset, based on 2350 calories per adult per day. Basic non-food items were also adjusted for the poverty line, which was inflated over time by the CPI.

  4. 4.

    Share of Punjab in total population of Pakistan is 56%, followed by Sindh with its 25% share

  5. 5.

    The asset index variable ranges from 0 to 8, including eight assets that are washing machine, AC, TV, Telephone, computer, refrigerator, motorcycle, and car.

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Acknowledgements

The current paper is part of the detailed report entitled “Economic Growth and Dynamics of Rural Poverty: The Case of Pakistan (2000–2010),” presented at the Technical Workshop on “Economic Growth and Dynamics of Rural Poverty” hosted by the Chronic Poverty Report (CPR), June 19, 2017 London, UK. The authors are grateful to the Chronic Poverty Advisory Network, Andrew Shepherd (Director CPAN), and Vidya Diwakar (Senior Research Officer CPAN) for giving valuable feedback on the report.

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Annexes

Annexes

See Tables 8, 9, and Fig. 5.

Table 9 Rural physical infrastructure by province in Pakistan

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Farooq, S., Ahmad, U. Economic Growth and Rural Poverty in Pakistan: A Panel Dataset Analysis. Eur J Dev Res 32, 1128–1150 (2020). https://doi.org/10.1057/s41287-020-00259-y

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Keywords

  • Economic growth
  • Poverty
  • Dynamics of poverty
  • Pakistan