An estimation of the macroeconomic determinants of income poverty in Pakistan? Evidence from a non‐linearARDLapproach

Abstract

Poverty is considered a complex and multifaceted phenomenon that can be subjected to various socio‐economic factors. This study aims to assess the potential asymmetric influence of foreign direct investment (FDI) and trade openness, controlling for economic growth, health expenditure, and population size on income poverty in Pakistan from 1972 to 2018 by employing the Non‐Linear Autoregressive‐Distributed Lag (NARDL) approach. The results exhibit the presence of long‐run asymmetries among FDI, trade openness, and income poverty. The results also reveal that poverty reacts to the positive and negative trends in FDI and trade openness atypically. Moreover, the findings also confirm that population growth and health expenditures ameliorate the deleterious repercussions of income poverty. For policy‐makers having an interest in asymmetric nexus among FDI, trade openness, and income poverty. As per the findings, relevant policy level suggestions are recommended.