Exploring the Asymmetric Effect of Internal and External Economic Factors on Poverty: A Fresh Insight from Nonlinear Autoregressive Distributive Lag Model

Rui M. Dantas, Shahzad Ali, Muhammad Rafiq, José Moleiro Martins, António Abreu, Mário Nuno Mata

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Abstract

Objective: This study examines the asymmetric impact of both internal (military, education, and health expenditures) and external (trade opening and foreign direct investment) factors that contribute to poverty reduction. Methodology: To find an asymmetric relationship between the proposed variables, we used a non-linear ARDL co-integration approach for the period ranging from 1981-2019. Findings: The findings of the study confirm the asymmetric impact of internal (education, military, health expenditures, quality of governance) and external (foreign direct investment, openness) factors on poverty. The finding confirms that ignoring nonlinear or asymmetric properties of macroeconomic variables may mislead inferences. This study has policy implications for government officials to reduce poverty. Novelty: the economic theory of poverty is studied from different perspectives by using internal and external factors that have direct and indirect effects on poverty. Furthermore, for in-depth analysis, a nonlinear approach is used to determine which factor has a strong contribution to eliminating poverty.

Original languageEnglish
Pages (from-to)755-767
Number of pages13
JournalEmerging Science Journal
Volume7
Issue number3
DOIs
Publication statusPublished - Jun 2023

Keywords

  • Globalization
  • Health Expenditure
  • Military Expenditures
  • NARDL
  • Poverty
  • Quality of Governance

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