Human Capital, Governance and Poverty Reduction: A Panel Data Analysis

Abstract

The objectives of the study are to examine the influence of Human Capital and Governance on Poverty. For this purpose, the study considers 44 developing countries and chooses time span from 2004 to 2017. The data on all variables are collected through World Development Indicators. The study utilized the index for human capital and three governance indicators i.e. Political Governance, Economic Governance and Institutional Governance developed by World Bank Organization. Generalized Method of Moment (GMM) is employed on the panel data for estimation of Econometric results. The results conclude that Human Capital and High Technology Exports are found to be significant causes of reduction in Poverty in Developing countries. Moreover, not only Political Governance, Institutional Governance, Economic Governance but also Overall Governance are reducing poverty in developing countries. Gross Fixed Capital formation and Trade Openness are found to be statistically insignificant. On the other side, Savings for Natural Resource Depletion is examined as increasing poverty in developing countries.