Exploring the Impact of Foreign Aid, Agricultural Production, and Corporate Social Responsibility on Poverty Reduction in Pakistan

Abstract

For many years, Pakistan’s economic progress and development have primarily depended on agriculture. However, widespread rural poverty impairs agricultural productivity, which worsens the outlook for growth for both the agricultural sector and the nation as a whole. Raising farmers’ incomes through rural development is a key component of agricultural reform, and the prime objective of this study is to identify how government policies and foreign aid affect Pakistan’s degree of rural poverty. This research aims to check the mediating role of rural development for the relationship of foreign aid, agricultural production, and corporate social responsibility with poverty reduction. This research also examines the moderating role of government support in the relationship of rural development with poverty reduction. In this regard, the current study proposes four hypotheses of direct relationships, three mediating relationships, and one moderating relationship. The population comprised farmers. The sample size of 119 was determined using G*Power with medium effect size settings, ensuring a robust representation of the target group. To gather primary data, a close-ended structured questionnaire was administered, employing a 7-point Likert scale to gather respondents’ opinions. This study investigates the Punjab province’s agricultural landscape from a quantitative perspective, using convenient sampling to identify the characteristics that contribute to reducing poverty, and was conducted from January to December 2023. Analytical procedures utilizing Smart PLS 4.0.9.6 for SEM testing reveal that all proposed hypotheses, including direct, mediating, and moderating, are accepted. The main results show that rural development significantly mediates the relationship between foreign aid, agricultural production, and corporate social responsibility with poverty reduction. Furthermore, government support positively moderates the relationship between rural development and poverty reduction. The findings underscore the significance of rural development, coupled with government support, as a pivotal factor in effectively reducing poverty in Pakistan’s economic landscape.