Poverty–Growth–Inequality Triangle by Principal Component Analysis

Abstract

The objective of the study is to investigate the associations among rural poverty, agriculture growth and income inequality in Pakistan as problems that have emerged in Pakistan during 1990s and 2000s (i.e., the reduction of agricultural share in GDP, widening income disparities and increasing vulnerability) by adjusting for the influences of rural development, sanitation and education. The regression result indicates that rural development and national income per capita has a negative association with poverty and income inequality, and a positive association with agriculture growth in Pakistan. Similarly, FDI has a positive impact on rural development, income inequality and poverty. External debt has positive associations with the poverty and income inequality in rural Pakistan. Finally, health expenditures have a positive relationship with the poverty and inequality which indicates that Pakistan’s health reforms are intrinsically anti-poor.